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County man fights IRS in high court

APPhotoBob Larive of Nevada County, co-owner of the Fior d'Italia restaurant, stands in its bar in San Francisco's North Beach district April 12.
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SAN FRANCISCO – A Nevada County resident’s case went before the nation’s highest court Monday in a battle being closely watched by the restaurant industry.

Bob Larive, co-owner of the Fior d’Italia restaurant in the North Beach neighborhood of San Francisco, said he and others have spent about $500,000 battling the Internal Revenue Service.

Larive moved to Nevada County two years ago and lives east of Lake Wildwood near Bitney Springs Road.

He has spent 10 years fighting an extra $23,000 Social Security tax that was levied against the restaurant in an audit.

Larive said the IRS was wrong in levying the tax. The agency did not try and document the actual amount by researching workers’ tax filings. It has also failed to credit employees’ Social Security accounts with the extra taxes, he said.

“It’s the principle of the thing,” said Larive. “There’s right and a wrong, and this is wrong.”

The U.S. Supreme Court on Monday heard arguments in a case expected to resolve how the nation’s restaurants pay Social Security taxes on their employees’ tips – which the IRS said totaled $14.31 billion in 1999.

Fior d’Italia, one of the country’s 170,000 restaurants with tipped employees, is challenging an extra $23,000 Social Security tax that was calculated on estimates.

Larive and his supporters said the taxes should be based on individual audits of the employees, not speculation.

”Such folly circumvents the wisdom of Congress that determinations about tip income be made on an individual basis,” said Peter Kilgore, an attorney for the National Restaurant Association.

Federal officials declined comment. But in briefs to the high court, the federal government said the IRS was authorized to estimate the amount of Social Security taxes.

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