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We recently paid a catering company $1400 as a deposit for our upcoming wedding. The company was highly recommended by a number of previous clients and had been in business for over a decade. Then their bank accounts were supposedly frozen by the IRS and poof our $1400 is gone. Is there any way to contact the IRS or a bank or some sort of financial recovery service to get this money back?

  • How was the deposit paid? (cash, check, credit-card?) Also how long till the wedding, and has the caterer informed you that they will not be able to perform the service you contracted them for? – Chuck van der Linden Aug 3 '11 at 7:07
  • It was paid by check and the caterer is not responding to attempts to contact them. It is 50 days until the wedding - I think we might be able to arrange another caterer, but it is likely that that our funds won't be recovered. A friend who is a CPA believes that it is likely that the story about the IRS freezing assets is a fabrication. – user4323 Aug 4 '11 at 4:05
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Sorry to hear about this happening to you.

You should file a lawsuit in small claims court and get a judgement. Unfortunately, you are probably one of many creditors, and are unlikely to get much, if any, money back.

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  • if the service that was contracted has yet to be rendered (or rather if the failure to render the service has yet to occur) I wonder if they might potentially have to wait until after the contracted service is actually defaulted on in order to pursue this in small claims. – Chuck van der Linden Aug 3 '11 at 7:11
  • It depends on the contract. If a term of the contract is that you must be able to select the menu by X date, failure to provide the menu may be grounds for termination for cause. – duffbeer703 Aug 3 '11 at 12:15
  • Yeah, getting in line is probably as good as it gets. If it was some other creditor there might be more wriggle room - not all creditors are equal - but the IRS is a different beast altogether. – gef05 Aug 3 '11 at 13:07
  • I think that this is the only likely course of action. I appreciate your reply and will begin researching the process of filing in small claims court. Thank you everyone for your responses. – user4323 Aug 4 '11 at 4:08
  • Something to look into (which might have to wait till after you have a judgement against them) is to find some piece of property they have which you could put a lien against. Like a building, truck, etc. Preferably something they would have to sell as they liquidate the business to pay creditors. As I understand it (check with a lawyer to be sure) a lien gets paid when the item is sold, before the rest of the proceeds get turned over to the seller (and they then pay a portion to creditors or whatever) – Chuck van der Linden Aug 4 '11 at 19:31
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If you have not already hired another caterer, potentially your best solution might be to try and work out something with these folks. Presuming of course that they still have access to their equipment, dishware, etc, and to the extent that what you have paid might cover their labor, equipment use etc there might be some way for them to provide the services you have paid for, if you pay for materials such as the food itself directly .

This presumes of course that it's only the IRS that they stiffed, and have not had most of their (material) capital assets repossessed or seized. and you still trusted them enough to work out something.

Otherwise as Duff points out you will likely need to file a small claims lawsuit and get in line with any other creditors.

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    Keep in mind that the IRS doesn't just seize stuff -- you can delay the process for a long time. So the chances are that the vendor has been in a death spiral for awhile. – duffbeer703 Aug 3 '11 at 15:30
  • @duffbeer703 - we think that this is probably the case. Check out the story in the local news here. – user4323 Aug 4 '11 at 4:14
  • Yeah, in this case it would appear 'trying to work out something with these folks' is a non-starter since they are not answering their phones. Sounds like small claims and get in line. – Chuck van der Linden Aug 4 '11 at 19:28

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