Unexpected Consequences for Unpaid Business Licenses

There can be serious consequences for not being up to date on your business licenses, especially if you are audited. What's worse - sometimes there are unexpected consequences too.

To get an idea of what can happen after an audit from Municipal Auditing Services (MAS), look no further than an April 2013 lawsuit filed by Stanton-based Hospitality Enterprise Management, otherwise known as 007 Showgirls.

The lawsuit came after MAS was contracted to review business licenses and unpaid fees in Stanton, a city west of Anaheim. As a result of that audit, Stanton officials asked 007 Showgirls for additional business license fees, according to the lawsuit. And each of 007 Showgirls’ dancers was asked to pay $369 for a business license and $94 per year for each subsequent year; then they would have to pay separate fees for every location at which they danced.

“Through MAS, the city has announced that it will charge the fees for each location even if the dancer only dances there once,” according to the lawsuit. Hospitality Enterprise Management dropped its lawsuit against MAS and the city, but the case provides some insight into how audits of unpaid business license fees can have unexpected consequences.