Outlook for Murky Coffee Is Crystal Clear

Murky Coffee is a classic example of a well-intentioned small business that failed due to financial mismanagement - not because it lacked customers or a good product.

In a story in today's Washington Post, Staff Writer Elissa Silverman reports that the coffee shop closed its popular gathering spot, much to the dismay of its patrons on Capitol Hill.

Murky Coffee, according to the D.C. tax office, owes more than $427,000 in sales and franchise taxes. The tax, which is 10 percent for takeout foods such as coffee, is due on the 20th of every month and is based on the previous month's revenue. The store, which has been open on Capitol Hill since fall 2003, generally owed $4,000 to $5,000 a month.

Although tax officials said numerous warning letters had been sent to owner Nicholas Cho, the news came as a surprise to his devoted customers as well as his dozen employees, reports Silverman.

Cho chalked up the tax bill to "poor cash flow management." He disputes the tax office's assessment of what he owes, estimating it at about $200,000. And he said he also owes Virginia about $20,000 for sales tax at his Clarendon shop.

"In a nutshell, we've gained a pretty good reputation for our coffee quality. That's the side of the business I've done pretty well at," Cho said. "The financial management side I haven't."

Cho said he never tried to evade authorities and always intended to make the payments.

Bill Day, a 10th-grade math teacher at Cesar Chavez Charter School who enjoyed $1 teacher coffees, called the closing of Murky Coffee "a terrible thing," adding, "The coffee was good, and you feel better about buying it here than at Dunkin' Donuts or Starbucks."

But Murky Coffee of Capitol Hill won't be reopening. In addition to the back taxes, there's the matter of the eviction notice on the door.

By Sharon McLoone |  March 21, 2008; 12:25 PM ET
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I just found out about this today when I went to the Arlington location. Very disappointing.

I hope the Arlington shop stays open. The coffee at Murky is *the* best coffee I've ever had.

Posted by: Tobi | March 25, 2008 8:18 AM

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