Missing paperwork snowballs into tax lien embarrassment for Bellingham company

THE BELLINGHAM HERALDJune 30, 2013 

tax lien

Co-owner Brad Reinke lifts a large cylinder with a crane at Reinkes Fabrication east of Ferndale, June 24, 2013. A tax lien against the family-run company was published by the Bellingham Business Journal even though the IRS cleared them of wrongdoing.

PHILIP A. DWYER — THE BELLINGHAM HERALD Buy Photo

The family members who run Reinkes Fabrication got the last word after the small metalworks shop north of Bellingham received some head-scratching notices from the Internal Revenue Service in late March.

The IRS sent the company statements saying it owed more than $200,000 in unpaid federal taxes, penalties and interest.

The IRS issue was quickly resolved as the liens were triggered by missing paperwork, not unpaid taxes.

Earlier this year, the Bellingham office of the IRS asked Reinkes to send in copies of four quarterly tax reports that were, for unknown reasons, missing, said Nadine Frost, the company's accountant.

After the March 25 lien notices came out, Frost said she was told by the IRS that the notices were standard paperwork and that the company needn't worry about having to pay the $200,000.

The missing reports - two for the fourth quarter of 2009 and one each for the second and third quarters of 2010 - dealt with federal unemployment tax payments, federal income tax and other payroll taxes.

Once the lien notices were sent, it didn't take long for the matter to be resolved. On April 22, the IRS issued the company a "notice of case resolution," saying no taxes or tax returns were due. Then, on May 8, the IRS sent a "certificate of release of federal tax lien."

Frost used to send in the quarterly reports by regular mail. Now she uses certified mail, and is exploring electronic filing.

"It appears from looking at it that we didn't pay our taxes, which is not the case," Frost said.

To further clear the air, Frost plans to submit an IRS form used to withdraw filed notices of tax liens.

The Bellingham IRS auditor did not return a call for comment. David Tucker, an IRS spokesman in Seattle, said he couldn't comment on the specifics of the case, due to privacy concerns.

The Reinkes are happy to comment because dozens of customers and other people who saw the liens, which are public record, asked if the company was going out of business.

"This puts mud on our name, and that doesn't sit well with us," said Ryan Reinke, one of at least five family members active in the business.

That's not quite the end of the story.

On May 6, the company received more notices from the IRS. It turns out they had overpaid their federal taxes on two of the four missing reports.

The agency sent the company a refund check for $3,898.48.

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