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Mattress World & Typhoon! close due to tax and labor issues

February 29, 2012

Mattress World and Typhoon! hit tax & labor issue woes 
By Oregon Tax News,

Alleged tax and labor law violations potentially costing millions of dollars are forcing Mattress World and Typhoon! Inc., two well-known Oregon retailers, to close their doors. Roughly 300 jobs will be lost.

In the case of Mattress World, the state of Washington slapped the Portland-based company with a $1.7 million unpaid tax bill for failing to pay sales tax on items delivered and installed in Washington. Several Mattress World stores are located just across the border from Washington, where shoppers can easily take advantage of Oregon’s no sales tax. According to a KATU news report, however, Washington requires out-of-state companies to pay sales and other taxes when they operate as a “nexus”—meaning the company resides out-of-state but delivers products in Washington. That news allegedly caught Mattress World owner Sherri Hiner by surprise in 2009 when she was first notified that her company qualified as a Washington business.

Washington finally issued a warrant for the delinquent taxes in late 2011, which Hiner had vigorously fought, losing her house and car in the process. She said she believed collecting any sales tax for items delivered in Washington was the responsibility of the contractor hired to deliver the items. Washington law, however, requires the primary business to collect applicable taxes. In addition to the unpaid tax liability, Hiner blamed the pending closures of seven Mattress World locations on a slow economy. Ninety employees will lose their jobs.

Typhoon! Inc., which began in 1995 and grew to five restaurants in Portland, Beaverton, Gresham, Bend, and Redmod, WA, closed all of its doors and laid off some 200 people earlier this month. The Oregon Bureau of Labor and Industries (OBLI) recently charged the restaurant chain with unfair labor practices for allegedly discriminating against its Thai workers. According to the charges, Typhoon! paid Thai workers less money for longer hours and subjected them to worse conditions than other workers. The Oregonian reported that the OBLI is seeking $250,000 for each Thai employee “who suffered emotionally, mentally, and physically” from the alleged labor violations.

Bo Kline, the company’s president and chief executive, released a press release that cited personal health reasons for the closures, saying that she is unable to run the company without the help of her husband who passed away last year.

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