‘The Bear’ Season 2: Six Pressing Financial Questions

11 min read

The Bears is not a show about crime, per se—it’s just one in which there happens to be a lot of it. A partial list of malfeasance in 2022’s debut season includes aggravated assault, a stabbing, drugging an entire birthday party’s worth of children with Xanax, selling cocaine, Explicitly directing an employee to keep selling cocaine, driving with a suspended license, failing to pay spousal support, and something loosely described as “gangster shit” perpetrated by characters named Crooked John and Mr. Carl. Also, a variety of shenanigans involving a handgun.

Then there are the financial misdeeds. As in its first installment, the show’s sophomore season features trouble with the Internal Revenue Service. That’s in addition to some awfully fishy buckets of money—including the $300,000 in cash that Mikey Berzatto, owner of the Original Beef of Chicagoland, hid in dozens of tomato cans for his brother, Carmy, to find. Carmy took over the restaurant in Season 1 when Mikey left it to him after his death; the Season 1 finale showed Carmy finally discovering Mikey’s well-seasoned hoard. In the interim, Carmy learns that the restaurant owed that same $300,000 to Carmy and Mikey’s uncle Jimmy. The restaurant was in financial disarray: Vendors went unpaid, bills piled up, and, yes, the IRS had been ignored.

Far from the $300,000 being the answer to the Original Beef’s problems, however, Season 2 finds Carmy and the gang using it to kick-start a new venture—which is, to say, an enormous amount of additional financial chaos. Now there’s a new restaurant called the Bear on the line, and a new, bigger loan—ie, a new, bigger debt.

One thing Carmy does not do at any point is talk to an accountant or a lawyer, so we take the liberty of doing it for him. Here are six pressing questions about the finances of the Original Beef and the Bear, and whether the Berzattos should be worried about the G-men coming knocking.

How Much Was Mikey in the Hole?

First, the good news: It’s probably not much more than the initial $300,000 that Mikey owed Uncle Jimmy. It’s unclear how, or when, Mikey bought the Original Beef building. Jimmy and Carmy agree that the lot is worth about $2 million, suggesting Mikey had a good amount of equity; there’s no mention of a mortgage, so it could be that there’s not much in the way of outstanding debt. (This would be, uh, surprising for Mikey, but sure.)

As for the vendors, Mikey likely couldn’t have gone too far into the red. “Vendors will not continue to deliver if you miss a payment,” says Jeff Phillips, a lawyer licensed in Illinois and Wisconsin whose practice primarily concerns small businesses struggling with creditors and the IRS. “Once you miss a payment they will typically require cash on delivery and also that you pay any past due bills to receive another delivery.”

You stiffen the meat guy once, and he’s probably not going to drop off next week’s 200 pounds of beef in exchange for an IOU. We know that new deliveries are still coming in, so it feels safe to assume that $300,000 is roughly the size of the debt.

Or was, anyway. In Season 2, Carmy, his sister, Natalie, and soon-to-be Bear chef de cuisine Sydney—now partners—convince Jimmy to lend them an additional $500,000 for the new venture. Carmy agrees to pay Jimmy back the full $800,000 in just 18 months. Should they fail, Jimmy will get the building and the lot.

Eighteen Months?

Phillips is not optimistic about the Bear’s odds of making good on the new loan.

“The idea that a restaurant of this size can repay $800,000 in 18 months is completely absurd,” Phillips says. “If they are opening in six months, this gives them 12 months of operations to repay at whatever interest rate, or Uncle Jimmy gets the ‘building.’”

Phillips also doubts the building is worth $2 million, given “an unclear Italian criminal element loitering nearby” in the form of Crooked John, Mr. Carl, and their associates.

Phillips adds: “In real life, if the Bear could not make payments at the end of 18 months, it would get the loan with Uncle Jimmy refinanced, or Uncle Jimmy would renegotiate new terms with the Bear, or the Bear would file bankruptcy to force Uncle Jimmy to accept the new terms. The original agreement with Uncle Jimmy would all need to be memorialized in writing, and then Uncle Jimmy’s interest would need to be recorded with Cook County to be valid against the building.”

That last point could theoretically prove useful to Carmy and Co., since the terms of the latest loan, let alone Mikey’s original $300,000 loan, don’t seem to have been written down. You know that part in movies where someone scams a criminal and says, “What are you going to do, call the cops?” Well…

… Is Uncle Jimmy a Mobster?

Here’s an unanswered question in The Bears: What, exactly, is the source of Jimmy’s apparently abundant dough? He has now ponied up $800,000 in cash to his nephews; when the initial $300,000 went missing under Mikey, Jimmy didn’t seem particularly concerned about getting it back, other than softly suggesting to Carmy and Natalie that they should think about selling a couple of times. (Jimmy also took no for an answer.) Then there’s the way he responds to the news that Mikey hid the $300,000 in the tomato cans: “Motherfucker didn’t put it in a bank, did he?”

There are probably noncriminals who have expressed such a sentiment, but let’s accept that riffing on the Stringer Bell rule does not suggest a Boy Scout. “If money is in a bank, it is more accessible to the IRS and other creditors,” Phillips says. “For example, if a vendor is owed money it could sue the Original Beef and get a judgment. It could then garnish whatever money is sitting in the bank account by a legal filing and notifying the bank. If money is owed to the bank [in the form of a loan to buy the building in the first place, perhaps] that maintains this account, the bank could likely sweep the account and take it for its debt.”

Banks create paper trails, which are not generally desired during the orchestration of crime. Yet there’s an exception that is perhaps especially notable in proximity to the aforementioned gangster shit: money laundering. “If Uncle Jimmy laundered the money through the restaurant,” Phillips says, “he would want it to run through a bank at some point to legitimize it.”

Phillips is not the only financial expert to raise suspicions about Jimmy’s interest in the Original Beef. “Is this Uncle Jimmy character legit?” asked one tax attorney licensed in Illinois with over 10 years of experience in tax law, including audits of Chicagoland restaurants, who requested anonymity due to concerns that their employer would not look kindly on the dispensation of legal advice to a fictional chef. “I’m starting to have some questions about a guy who has hundreds of thousands of dollars just lying around and is worried about FinCEN [the government agency to which banks are required to report deposits over $10,000] finding out about it. Is he using this restaurant to launder money?”

There’s a related spot of legal uncertainty: We also don’t know how Mikey went about transforming Jimmy’s loan into tomatoes can–sized wads of cash. Presumably Jimmy didn’t extend the loan via a suitcase full of cash, so the KBL—Jimmy Kalinowski, Berzatto, and Lee Layne—ledger that Carmy finds in the Original Beef office with small amounts adding up to just over $300,000 might be withdrawals from a bank account associated with the restaurant. “It’s not necessarily illegal to keep your money in cash in tomato cans,” Phillips says. “However, if you are hiding it from the IRS, then it would likely be fraud against the IRS and criminal.”

“Evading the Bank Secrecy Act reporting requirements in this way is a federal crime in itself, called ‘structuring,’” added the Illinois tax attorney. “Honestly, it doesn’t sound like the brother had a great plan.”

Hang On, What Does Lee Layne Have to Do With This?

It’s not actually clear. We meet Lee—a friend of the family whom the Berzatto kids have given the honorary title of “Uncle”—in the sixth episode of Season 2, “Fishes,” with his character played by a cantankerous Bob Odenkirk. Things get ugly between Lee and Mikey, with Lee saying that he advised Jimmy not to give Mikey any money for the Original Beef. Jimmy did, of course, and this would seem to suggest that Lee didn’t lend himself anything. But if Lee wasn’t involved in the Original Beef, why did Mikey include his name in relation to the $300,000 loan and withdrawal? Is there another loan owed to Lee? Did he have some stake in the Original Beef?

So, You Mentioned the Feds?

“There is something called the Internal Revenue Service, and they collect taxes from human beings,” an exasperated Natalie scolded Carmy in a scene from Season 1. Carmy, like Mikey before him, seems to be repeatedly in need of this lesson.

Last season, Natalie told Carmy that Mikey left the restaurant—and her—in direct straits. She says he didn’t pay taxes for five years—so 2017 to 2021, since the plot of The Bears begins four months after Mikey’s 2022 death.

“And somehow I’m a co-owner in this nightmare and my home will be arrested if I don’t give them some money,” she says. (A co-owner of the Original Beef? Of the building? Inquiring auditors want to know!) “So I’ve spent the last few days on top of my other job and my life getting all of your documents in order so I can reach an agreement with them to pay a smaller amount. So I’m going to need you to go in there and get the payroll records from 2018.”

The “smaller amount” would refer to the penalties that the IRS imposes for unpaid taxes; the actual unpaid amount would still be required, though the IRS is generally willing to agree to a payment plan, Phillips says.

It’s not clear, however, what the missed tax payments were in the first place. Says Phillips: “One issue with the story line is the IRS will not allow you to continue to operate if you do not pay your quarterly payroll taxes, so it is very unlikely that the 2017-2021 tax years are for payroll, unless Mikey paid his employees are all in cash and now is filing taxes to pay payroll taxes and penalties.”

“Restaurants have an annual income tax reporting requirement and a quarterly Form 941 employment tax filing requirement,” says the Illinois tax attorney. “So did they square up the income tax and the employment tax? Or did the brother evade the employment tax filing requirement by paying his employees under the table? This is where restaurants really get in trouble, tax-wise. Either they pay the employees under the table, or withhold the employee portion of employment tax and income tax but keep it and put the money back into the restaurant. The latter is called ‘pyramiding’ and it is taken extremely seriously by the IRS.”

On that front, Natalie faces some substantial personal peril: “Whoever is responsible for forking over the money to the feds but fails to do so is assessed as 100 percent of the liability personally; it’s called the Trust Fund Recovery Penalty,” the tax attorney continues. “The IRS’s other remedy in that situation is bringing the business to the federal court to obtain an injunction shutting down the business. But I’m guessing this was too boring to make it into the show.”

So the IRS Is Not Happy. What Happens Now?

Clearly, the IRS is wise to at least some of what happened at the Original Beef. But the Berzattos needn’t worry about handcuffs—for now.

IRS investigations can be a lengthy process, according to a veteran federal prosecutor with more than 15 years of experience reviewing tax cases who also spoke to The Ringers under the condition of anonymity because of concerns about their employer. Getting from the point when the IRS determines something is amiss to the agency dispatching a responsible officer—“essentially the FBI of tax crimes,” per the prosecutor, and “armed at all times”—is a process that can drag on for years.

One thing working in the Berzattos’ favor: Like a new restaurant in search of a quality kitchen staff, the IRS isn’t always flush with candidates. “There can be many reasons why a failure to pay over five straight years has not yet become a criminal matter,” the prosecutor said. “While the automatic notices may have gone out, it takes an actual human to follow up on those notices. The IRS has been strapped for personnel over the last 10 to 15 years and, as a result, a lot of these cases take time to simply be assigned to someone who can handle it.”

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