Daniella's Track Side Grille, a Fair Lawn staple that has remained closed since being seized by the state last week, owed $40,000 in sales taxes, a Treasury Office spokesman confirmed.
Andrew Pratt, the state Treasury Department's communications director, said the Division of Taxation had been working with the restaurant since 2010 to collect the unpaid taxes, but ultimately gave up hope and closed it down last Thursday.
"We've attempted to work with them, to collect taxes and help them in those areas wherever we could, but despite our efforts they just weren't paying taxes," Pratt said. "When someone repeatedly doesn't follow the law, there has to be some penalty eventually. You can't go forever."
In New Jersey, businesses are required to charge a 7 percent sales tax on customer purchases and pass that money on to the state. They aren't legally permitted to touch the sales taxes they collect or divert them to another use.
Pratt said that more than 99 percent of the restaurant's unpaid taxes were sales taxes and less than 1 percent were payroll taxes.
Daniella's won't be re-opening unless the restaurant pays back all the taxes owed, enters an agreement to pay taxes going forward and demonstrates it can actually pay those taxes, Pratt said.
Joanne Graziano, the restaurant's manager, previously said the restaurant's stakeholders "were working on a solution," to pay the back taxes and re-open.
They may also sell the restaurant, if a buyer can be found. Track Side has been on the market since early 2010. Its asking price, which was originally $1 million, is down to $599,900, according to the New Jersey Multiple Listing Service.