The Fable of Ferris Fox

UPDATE: A moral has been added.

Once upon a time in River City, there lived a fox. Ferris Fox was his name. Fox was a businessman who owned a lot of property in downtown River City. Ferris was a smart fox.

He started with one property and borrowed against it to buy another and then borrowed against that one to buy another and so on and so forth until he controlled a couple dozen properties in the River City. A lot of these properties were large commercial buildings that could then be rented to businesses that paid Ferris Fox top dollar for their prime locations.

Life was good for Ferris Fox.

But a lot of those big buildings that Ferris Fox had invested in didn't attract businesses as he had hoped. For one reason or another, they stayed empty.

Cash flow for Ferris Fox was a bit tight. Empty storefronts meant no money was coming in. But mortgages had to be kept current and the heat had to be kept on and basic maintenance had to be done. Revenue was a real challenge.

So Ferris decided to delay paying his property taxes on a lot of the properties he owned. There's nothing illegal about that, boys and girls. Interest and penalties just get added to the taxes for being delinquent. It's a little like a payday loan company except it's the government and their terms are better.

You only have to worry about the government selling off your property if you don't pay your taxes for two years. Surely, Ferris thought, he could get back on his feet within a few months.

But then the economy tanked.

Businesses that had occupied some of his buildings closed. Money got tighter. Ferris Fox sold off some properties, but that tax debt loomed large. One year turned into two and the government threatened to sell his real estate to pay his back-taxes. Ferris scrambled and put together enough money to pay off his two-year-old tax debt. He still had the most recent year tax debt, but that wouldn't be a problem for another year.

Ferris Fox decided to take matters into his own hands. He'd open his own business in one of his own buildings. He decided to open a bar.

But there was one itsy-bitsy problem.

A bar requires a liquor license and to get a license in River City your taxes have to be paid in full, together with any interest and penalties.

It said it was so, right there in the River City's code of ordinances.

"Issuance of licenses prohibited until delinquent tax is paid," is what the code said.

That was a problem since Ferris Fox owed back-taxes. He was in a bind. He wanted to pay his taxes, but he had to have cash flow and a fast way to get cash flow was to open a bar. But you can't have a bar without a liquor license.

This was a problem.

So Ferris Fox thought and thought, and then thought of an idea.

A lot of the properties he controlled were legally owned by Ferris Fox Investments, LLC He did this for business reasons. Ferris Fox Investments, LLC is who owed the back taxes, not him.

Ferris thought to himself, what if he created a brand new company, just for his bar? It would owe no back taxes because it was brand new. It would have a clean slate.

Ferris paid a lawyer to create the new company -- Foxy's Foxhole LLC is what he called it -- and requested a liquor license from the River City City Council using that name.

The council studied the license request, but saw nothing wrong. After all, "Foxy's Foxhole, LLC" was nothing like "Ferris Fox Investments, LLC" which owed back taxes. They were completely different names.

Apparently, the River City City Council overlooked the fact that the mailing address for both LLCs was exactly the same.

And so the River City City Council granted Foxy's Foxhole, LLC its liquor license and Ferris Fox was able to open his bar and get some cash flow going.

He could now start paying down his tax debt and dreaming of the day that the economy would bounce back and all of his storefronts would be full of businesses paying him plenty of rent and life would be good once again.

Moral: No matter the system, it can always be out-foxed.