(snip)"For as long as many can remember, the Gulf fishing industry has operated on a mostly cash-only basis. Shrimp and crab are purchased on the dock with cash and deckhands who help on the boats are paid in cash.
"It's an industry that goes back seven and eight generations," said Ewell Smith, executive director of the Louisiana Seafood Promotion and Marketing Board. "It's based on relationships and handshakes, and it doesn't change much."
Fishermen are supposed to keep records of what they sell and pay taxes on their income, but many sell under the table and skirt the law. The scofflaws now may lose a chance to get a share of the $20 billion BP oil compensation fund set up to help individuals and businesses hurt by the largest-ever oil spill in the Gulf of Mexico. Without verifiable proof of income, they cannot access the fund to recoup any financial losses.
St. Bernard Parish President Craig Taffaro said he would like to see a federal tax amnesty for those fishermen who have not paid their taxes and has shared his idea with a U.S. senator. Any compensation fishermen receive will be taxed, and for those who have not followed the law, that could trigger IRS scrutiny and, possibly, retroactive tax payments, he said."(snip)
(snip)"Not everyone supports the idea, especially some fishermen who have lived by the industry's honor system and abide by state and federal laws. About 40 percent to 50 percent of what a fisherman catches is sold for cash, said Peter Gerica, a third-generation fisherman from New Orleans.
"I don't think you should reward people for doing wrong," Gerica said. "I feel like, if you play, you gotta pay."
Smith, whose organization represents 13,000 fishermen and processors, said he understands Taffaro's compassion. No one wants to see any hard-working fishermen miss out on assistance, he said, "but that's what happens when you don't pay your taxes.""(snip)
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Similarities should be obvious ...
- from an 'official' standpoint, cash income that was not reported to the IRS is officially considered not to exist by the corporate world. This can be extremely problematic if 'proof of income' becomes necessary - for loss compensation in this case, but also for loan applications, for landlord rent / lease applications, and a host of other situations.
- unforseen external events can indeed garner IRS attention to be directed towards 'cash' businesses. In this case the tax evading gulf fishermen waved their own 'red flag' by seeking compensation based on past unreported income levels. However, where dancers are concerned, more relevant unforseen external events could be a club bust, a full audit of the clubowner, as well as waving your own 'red flag' by registering a new car, registering a home purchase property deed, paying tens of thousands of dollars in college tuition etc.
- once IRS attention has been attracted by some event, there is nothing stopping the IRS from widening their investigation to cover past years' business activities. This in turn can result in the IRS constructing their own estimate of past years' unreported cash income levels, and sending out bills for back taxes owed on unreported past years' estimated incomes ( plus penalties and interest ) - or as the article euphemistically calls them, 'retroactive tax payments'.
- In the case of Gulf fishermen who voluntarily added their names to BP's 'compensation' list, the IRS will undoubtedly latch onto this list and run cross-checks to see if previous years' tax return filings were made at all ... and if so whether the amount of reported income has any basis in reality. Where dancers are concerned, club files of dancer job applications or public records of dancers' licenses are equally accessible to the IRS to use as a basis for similar cross-checks.
However, there is one significant difference between Gulf Fishermen and exotic dancers. If 'caught' evading income taxes, no politicians are likely to step forth in support of passing a 'tax amnesty' law to benefit tax evading 'strippers' !
And stopping to think about it, there is another significant difference. Up until the Gulf Oil Spill and BP compensation claims, the IRS had not made a concerted effort to investigate tax evasion in the domestic fishing industry. In contrast, the IRS was recently provided with special Congressional funding to add IRS agents to establish a 'targeted enforcement' unit for investigating tax evasion in the adult entertainment industry ... the IRS definition of which includes strip clubs and 'strippers'.
If it's any compensation, after claims of 50% unreported incomes being widespread in the Gulf fishing industry have now garnered national media attention, it's extremely probable that next year will see an IRS 'targeted enforcement' unit investigating self-employed fishermen throughout the USA ! After all, from the standpoint of economic stimulus and additional jobs, adding IRS agents is one of the very few situations where a gov't worker 'produces' more revenue for the gov't than their paycheck costs the gov't. Unfortunately, from a real world economic standpoint, an IRS agent doesn't actually 'produce' anything - they merely 'transfer' money earned by productive US workers out of the workers' pockets and into gov't coffers, from which their own paychecks are drawn.
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