State shuts down Mary Maestri’s

TONTITOWN — After 87 years in business, Mary Maestri’s restaurant was closed by the state Friday for failure to pay at least $21,012 in sales taxes.

Daniel Maestri, owner of the well-known Italian restaurant that was founded by his grandmother, said he had already closed the business on Wednesday.

“This is all for show,” he said Friday as state employees posted large pink closure signs outside the business. “‘Oh, we’re the big state we’re closing you for this and that.’ It’s already closed. They closed a closed business. It’s a threatening tactic. It’s an intimidating tactic.

They’re trying to scare people.”

Maestri stood under the canopy in front of the restaurant Friday morning as rain poured down and a locksmith changed the locks for Signature Bank of Arkansas, which owns the building and was leasing it to Maestri.

“This is a really sad day for us,” Maestri said. About 30 people lost their jobs, he said.

The restaurant had been a destination for generations of customers.

“When you lose an icon like Mary Maestri’s, it’s hard to take,” said Mayor Joe Edgmon. “It’s sad because a lot of people identify Mary Maestri’s with Tontitown. When it’s closed down, it’s kind of like taking one of the best parts of our community out, not to mention the sales-tax base we lose when people don’t come out.

“It’s a sad story. I hope something can get resolved. It’s devastating, as far as I’m concerned, to our community.”

Maestri said he had been on a payment plan with the Arkansas Department of Finance and Administration because he hadn’t paid sales taxes for at least three months over a two-year period.

Maestri said he got a week behind on a payment under the agreement, and the state closed his restaurant.

“One week late, and they canceled it,” he said. “I had the money. I could have paid it in a week. ... They wouldn’t talk to me. They wouldn’t consider it.”

Maestri said businesses aren’t given ample opportunity to repay their tax debt before being closed by the state, and it is a particularly bad problem during a recession. He said he had fallen behind on payments only once before, and that was last year. The second late payment prompted the agency to issue a business closure order on Jan. 6, he said.

Roberta Overman, manager of the sales tax division for the department, said business closure orders were issued for Mary Maestri’s on March 22, 2007; May 8, 2008; Dec. 9, 2008; Feb. 4, 2009; July 20, 2009; and Jan. 6.

But closure signs weren’t posted until Friday.

“Since signs didn’t go up before, we did something to work something out with him,and typically that’s a payment plan,” she said.

Overman said letters are sent to businesses when they fall two months behind on payments during any two-year period. When they fall three months behind during a twoyear period, a business closure order is served.

“There is no taxpayer that this is a surprise to unless they’ve moved to Canada and haven’t told us,” she said. “We send them a flood of letters.”

Overman said Maestri’s failure to follow through on previous payment plans prompted the closure.

“He did have a payment plan several times before and hadn’t followed through, which is why he can’t get a payment plan now,” Overman said. “A posting of a pink sign is the very last resort the department goes to. It means everything else has failed up to that point.”

Maestri had filed a motion in Washington County Circuit Court challenging the closure order, but he withdrew the motion Thursday.

Neither Maestri nor Overman would say how much Maestri was supposed to pay under the plan. Current taxes collected were also to be remitted along with payment of the back taxes.

Overman said liens have been filed against Maestri for two months of sales taxes he owes for 2008 as well as for November 2009. Overman said Maestri owes $21,012 in back taxes for November 2009 and the months before that. She isn’t allowed to reveal the taxes he owes for which liens have yet to be filed, so Maestri could owe taxes for months since November.

“It’s not very much money to close a business,” Maestri said, noting that he has paid $2 million in sales taxes to the state since 1977, when he became owner of the restaurant.

“What happens in real life is that people struggle,” Maestri said. “Closing them up without giving them every opportunity [to get back on their feet], that’s not going to help anybody.”

The taxes owed by Maestri include 6 percent to the state,2 percent to Tontitown and 1.25 percent to Washington County.

“If he corrects his tax arrearage, we’ll remove our signs, but now his property is in possession of the bank,” Overman said.

Gary Head, chairman and chief executive of Signature Bank, said the building is for sale for $2.1 million, and he would also consider leasing it.

“I own it, and I don’t want to,” Head said. “It’s a shame. It would be nice if somebody opened it back up.”

Maestri said the Bank of Rogers owns the equipment inside the building.

“In this case, everything is owned by the bank,” Overman said. “There would be nothing for the state to sell for payment of those taxes.”

The state’s liens are against Maestri personally, and the state will continue to try to collect that debt, Overman said. The state doesn’t make money through business closures, she said; it’s just trying to collect money owed to the state.

“Our goal is to fix the problem and not to close the business,” Overman said. “The whole point of the law is not for [the] DFA to come out heavyhanded and shut businesses down. It’s really our effort to get them in good standing.”

The department’s website lists 120 Arkansas businesses that have been closed for failure to pay sales taxes. Several hundred more have received business-closure orders but have either paid their back taxes or are working to do so.

The number of business closures seemed to increase with the recession in late 2007, Overman said, but she didn’t have figures to indicate total revenue, collections and number of closures since that time.

Maestri said he will either need to get some investors together to help him reopen the business, or he will sell it. The name Mary Maestri’s is still well-known throughout Arkansas, he said.

“But first, we’ve got to get past all this calamity we have now,” he said.