Nathans of Georgetown, Washington D.C.
Suddenly Widowed and Fighting the IRS
I never kept track of our finances. Now I had a business I didn't want and the debt that came with it.
By Carol R. Joynt
Jan. 24 issue - When my husband died suddenly of pneumonia in 1997, I was his sole heir. Because our 20 years together had been rich with life's pleasures, I prepared myself for a widowhood that was lonely but secure. My chief concern was navigating the choppy waters of grief with our 5-year-old son. There was no crystal ball to show me that instead of leaving us secure, my husband's death had begun a process of events that would plunge us into a battle for survival.
What happened to me is not unique. There are plenty of women who will relate to this: when my husband died he left me holding the bag, and it turned out to be a bag of snakes. It's not that he didn't love and shelter me; rather, with my acquiescence, he sheltered me too much. I was clueless about our day-to-day finances and how he ran his business, a 35-year-old iconic Georgetown watering hole named Nathans. You look at the place, sitting on the best corner in the city, a crowd inside, and you see dollar signs. It's an illusion.
Two weeks after my husband died, his lawyers told me he had been under investigation for tax fraud. They said it was a multimillion-dollar case and, as his heir, it was now mine. The shock of the allegations against him was nothing compared with my shock at becoming a defendant. That night, I sat up till dawn, fearful that a jackbooted SWAT team would smash in the door and drag me away.
My plan was to sell Nathans quickly. I was a television producer, not a saloon owner. Unfortunately, no one wanted a business caught in the cross hairs of the IRS. Instead of selling Nathans, I'd have to run it. Like any general preparing for battle, I pulled together an army.
I hired a team of lawyers who thought I had a case for what the IRS calls "innocent spouse" status. For one year they negotiated hard with the government lawyers, who ultimately acknowledged I was not party to the crime. The IRS got the money, but at least I was left with the business, the house and some furniture. My relief was short-lived, because we soon learned that local laws prohibited me from using my husband's liquor license. Without it, I'd have to close. My lawyer dismally advised, "You'll need special legislation to change this, and that's virtually impossible."
A bill on Nathans's behalf was introduced in the city council, but its success depended on serious lobbying on my part. This was new for me. I couldn't hide behind a television camera or a brigade of lawyers. I had to go face to face with community leaders, activist groups and neighbors. My son and I knocked on doors, asking residents to sign our petitions. As we did, I learned that the business I was trying to save meant something to a lot of people. Friendships, marriages and community bonds had been spawned there.
After a long fight the bill was passed unanimously. Now Nathans had a chance. I worked hard to get its "buzz" back. Well-planted gossip-column items helped. But slowly, it became apparent we couldn't turn a profit. A few restaurant acquaintances of mine looked at my financials and shook their heads. With a tough lease and outsize rent, an old kitchen and monstrous debt, the business simply couldn't afford itself. We trimmed fat where we could, and hoped for the best.
Then, fate took a nasty turn. Manhole covers outside our front door exploded, power was lost, streets (including ours) were closed and customers stayed away in droves. The city announced a two-year public-works project to rebuild the infrastructure. The night the work began, the mayor came to dinner to lend support, but we knew the street work would be an assault on our shaky stability.
The September 11 terrorist attacks turned everyone's world upside down. For the D.C. restaurant industry, it meant an immediate depression. We began to short the rent, and missed some tax payments. I got a loan and put a lien on my property to cover debts. Through it all, people came in the door. Maybe not like before September 11, but commerce found its own "new normal." The cops on the beat still had coffee at the bar. Redskins, movie stars and politicians still bellied up for a brew.
On Feb. 1 it will be eight years since I lost my husband and gained a business. During the day I juggle hope and worry; at night they haunt my sleep. But before all this I was a stranger in my neighborhood, and now I'm not. When I walk to work I pass a half-dozen people I know. At the pharmacy or the dry cleaner, the owners and I trade small-business war stories. I know where I live and who I am, and have friends and my teenage son to humor me. I'm swimming in quicksand but, like that other swimmer, Jimmy Stewart in "It's a Wonderful Life," I recognize the rewards of not giving up.
Joynt lives in Washington, D.C.
© 2005 Newsweek, Inc.