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December 2, 2010

When Puppy Mills Don't Pay Taxes

Tax liabilities can shut down irresponsible breeders

  • Silky was recently rescued from a puppy mill in Indiana. She is getting ready for a new, forever home. Laura Bevan/HSUS

  • HSUS staff also brought two tiny puppies to safety in the Indiana raid. Laura Bevan/HSUS

  • Puppy mill dogs often suffer from rotten or missing teeth. Laura Bevan/HSUS

When most people hear the term "puppy mill," they imagine miserable dogs: matted fur, tiny wire-floor cages, piles of waste and filth accumulating in corners, and litter after litter of puppies being churned out like widgets.

Taking down an dirty business

To Andrew Swain, Chief Tax Attorney for the Indiana Attorney General’s Office, the puppy mills also conjure up something else: an image of an underground business violating a host of state and federal regulations—including tax laws.

Specifically, Swain is interested in the failure of Indiana's puppy mills to collect and remit sales taxes.

Using the same tactic used to bring down notorious 1930s mobster Al Capone, Swain has been wielding the state's tax code against puppy mills. His innovative approach to cracking down on Indiana’s puppy mills is the first time this tool has been known to be used against animal abuse.

Rescuing the innocent

Until Swain’s efforts, many puppy mills, fixated on the bottom line, simply avoided paying state and local taxes.  If they’re caught, the resultant civil and criminal tax liabilities can be enough to permanently shut them down.

To date, three puppy mills in Indiana have fallen, thanks to Swain's clever application of the tax code—allowing The HSUS to step in and rescue more than 400 long-suffering dogs from dismal conditions.

How it works

The ins and outs of the tax code take some untangling. If authorities can determine that an organization (in this case, a puppy mill) is delinquent in collecting and remitting sales taxes, the state can issue the business a tax assessment which immediately becomes an enforceable judgment, and they can then seize the business' inventory (or dogs, in the case of puppy mills) to begin satisfying the judgment.

To recoup the tax money an underhanded puppy mill owes, the state may sell the seized dogs. Meanwhile, the corrupt puppy mill has an injunction prohibiting it from operating until it repays its tax debt—an amount often reaching into the hundreds of thousands of dollars and next to impossible to repay. Most puppy mills are forced to close for good.

A responsible dog breeder will not only shun puppy mill cruelty, but will also comply with state and federal tax laws.

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