What happens to seized NYS businesses if the debt isn't paid?

SARATOGA SPRINGS, N.Y. (NEWS10) -- In February, two downtown Saratoga Springs restaurants, The District at 43 Phila and Nashville of Saratoga, were seized by the New York State Department of Taxation and Finance. But what does a seizure mean exactly and what happens if the owners don't comply?

Most times, businesses are seized by the New York State Department of Taxation and Finance due to unpaid taxes. Until the taxes are paid, the business is in possession of the state.

“Seizure is typically a last resort after substantial periods of non-compliance and/or non-responsiveness. It’s not something we like doing but not to enforce the law in this regard is unfair to others in the same business," said the Department of Taxation and Finance.

As of March 19, the Department of Taxation and Finance said The District had been redeemed and was no longer in possession of the state, meaning the owners paid the $25,505 in owed taxes. However, Nashville of Saratoga was still in "seized" status. NEWS10 has checked back with the Department of Taxation and Finance to see if this status has changed and will provide an update if so.

Both The District and Nashville of Saratoga reportedly have the same owners and are located directly next to each other on Phila Street. The Department of Taxation and Finance said Nashville of Saratoga owes $80,803 in back taxes, but what if those unpaid taxes are never paid?

When a business is seized, the Department of Taxation and Finance takes possession of its assets including vehicles, cash register contents, merchandise, and the property/building if it is owned by the business. According to the Albany Business Review, Nashville of Saratoga does not own the property and the owners of the building at 39 Phila Street are looking to evict the business.

If the business owners do not make "a good faith effort to comply with the law" in a reasonable time frame, the NYS Department of Taxation and Finance will go to auction with the business' assets. The department will notify the owners of the auction's date, location and time, sell the assets at the public auction, and then send the owners a statement of the disbursements of the auction money.

If the auction money is more than the tax debt combined with the other expenses, the surplus will be returned to the business owners, said the Department of Taxation and Finance. If an owner pays the back taxes, penalty, interest owed, and other expenses in full or makes an arrangement to pay them before the auction takes place, the business will be released to the owners.

This isn't the first time a restaurant has been seized in the Capital Region. In December 2023, the Route 50 Diner in Ballston Spa was also seized for non-payment of taxes. In that case, the owed taxes were paid the next day and the diner was able to reopen shortly after.

It is not known at this point if or when The District at 43 Phila will be reopening. The last post on The District's Facebook page is from January 17 and the restaurant is still listed as "temporarily closed" on Google. The owners have not responded to NEWS10's requests for comment.