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The IRS raided their store and sold their stuff within hours. Now they’re fighting back

Tony and Somnuek Thangsongcharoen, courtesy of Jason Freeman

An elderly Thai couple was left penniless after their life savings were seized and auctioned off from inside their own 34-year-old store. The couple filed a $2 million lawsuit against the federal government for improperly seizing and selling assets almost immediately.

In March of 2015, the IRS shut down Mii’s Bridal and Tuxedo in Garland, Texas for allegedly owing a total of $31,400 in unpaid taxes from 2005, 2008, and 2010.

Although the Thangsongcharoens’ accountant demonstrated they actually owed no debt, 20 IRS agents and Dallas police officers entered the store and asked for a $10,000 check or forfeit their inventory. Four hours later, the IRS had auctioned off 1,600 designer dresses and other store items $598,000 underneath the IRS’ own valuation.

Jason Freeman, a Certified Public Accountant and attorney representing the Thangsongcharoens, said the case was riddled with irregularities.

“To come in and seize potentially $1 million worth of inventory and sell it on the spot within about four hours for less than $17,000,” Freeman told Red Alert Politics. “To have a government officer actually purchase items, to have that appear to have been covered up or attempted to be covered up. To storm in with more than 20 government agents, armed agents, to come in and bring small children and sit them down to a pizza party to watch this. These are all completely improper actions.”

The Thangsongcharoens’ lawsuit claims that an IRS agent originally decided the store’s inventory did not need to be sold to repay the debt. However, information obtained through a Freedom of Information Act request found that the agency decided to “shut down this failing business,” which they claim led to a string of violated IRS policies.

Despite valuing Mii’s inventory at $615,000, the IRS sold their inventory for $17,000 — less than the alleged money owed — and sold the dresses for $3.75 each. The suit claims the IRS devalued Mii’s inventory from $615,000 to $6,000 — less than 1 percent of their initial valuation — to justify the quick sale.

The IRS sold the inventory within hours through a perishable goods sale reserved for items “liable to perish,” that would lose value in being stored, or be a “great expense” for storage. The IRS used their valuation to claim storing inventory would cost more than they would gain by selling it.

Otherwise, the IRS is required to post a public notice and wait 10 days before selling seized assets to allow the owners time to repurchase the property and to ensure a fair selling price.

The suit claims the IRS also seized items outside of the District Court Order that did not belong to Mii’s: a Keurig, a printer, a Nintendo Wii, Sony PlayStation 4, video games, a surround sound system, and a 65-inch TV. They also seized a Vietnam veteran’s hat that had been dropped off to have badges of honor sewn on, and refused to return it, according to the suit.

The suit claims it was “Bring your kid to work day.” The lead revenue officer’s four children sat on palates, eating pizza, and watching the Thangsongcharoens’ inventory being sold “for pennies on the dollar.” It also described that a seizing officer bid on and bought one of the assets.

The original complaint stated that the revenue officer knew the taxes owed were “incorrect and due to a system error” and that the tax years in question actually reflected “a net operating loss carryover, not a taxable amount.”

The $2 million suit seeks to cover “damages resulting from the reckless, intentional, and/or negligent disregard of the Internal Revenue Code (I.R.C.) and governing Regulations by officers, agents and/or employees of the Internal Revenue Service.”

Freeman said this was the worst case of IRS abuse he had seen.

“They have literally been left destitute. This case is an American tragedy, and is heartbreaking,” Freeman said. “I find it hard to believe that any reasonably-minded person could come to the conclusion that a stock of over 1,600 designer dresses constitutes perishable goods.”

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