Oil Spill: The Fishermen and the Tax Man

From the latimes

BP's request for tax records poses a problem for some residents of fishing communities in southeastern Louisiana — the nonconformists who haven't kept records or reported their cash income.

The first step for a commercial fisherman or coastal business seeking compensation for losses suffered in the oil spill seems simple enough: Submit copies of a commercial fishing license, proof of residence and tax statements.

But the request for tax records poses a serious challenge to some residents of close-knit fishing communities on the swampy edges of southeastern Louisiana, which for generations have harbored self-reliant nonconformists who don't pay much heed to everyday rules and regulations.

In other words some weren't reporting their income before the spill and have nothing to base a proper settlement off of. Also I guarantee that BP will 1099 each and every person they make a settlement with. Those 1099's will surely raise alarms with our favorite .gov agency the IRS.

That's a hell of a position to be in. You've lost your livelihood and trying to get compensation for it could quite possibly open you up to audits and possibly prosecution. Anyone who has not filed in the few years will probably expose themselves to more possible penalties and unpaid taxes than any compensation from BP.

I personally am not that sympathetic on this issue. It's one of the risks when you run an all cash business and don't file your taxes. Also at some point I expect these people to request some compensation from the Federal Government. Why should someone who hasn't paid into the system for years receive compensation?

Having said that in no way does this mitigate my anger at BP. I'm pretty sure this is a tactic they are using to keep the cost of claims down.

[edit on 1-6-2010 by jefwane]