Fishermen who are tax scoflaws want payment from BP based on actual earnings

Little Green Footballs (LGF): I heard some of this on local talk radio while the Roi & I were out and about today.

There are problems with the BP's claims payment process. However,  it seems BP wants to base lost income claims payments on people's tax returns, and it seems some of those tax returns weren't, well, exactly forthcoming in all cases as to the amount of money a person was earning per year.

BP has stated it will accept W-2 and even ship tickets. The man in the video didn't file income tax for three years which is against the law.

Now these folks can either:

1. Keep their mouths shut and accept a claims payment based on what they told the IRS they earned, or

2. Go back and file amended tax returns for each year, which would most likely result in their owing additional income tax (plus penalty and interest).

(LGF has) absolutely no sympathy whatsoever for those folks who got themselves into this pickle by cheating on their income taxes.

New York attorney Jerrold Parker warned about the potential pitfalls facing fisherman who intend to file claims against BP for the Gulf of Mexico oil spill.

Parker, speaking at Harris Martin Publishing's Oil Spill Litigation Conference, said there is "a lot of major tax evasion" among Gulf Coast commercial fisherman.

The conference, held at the W Hotel in New Orleans, dealt with BP litigation strategy.

Parker spoke with Reserve attorney Daniel Becnel Jr. and New Orleans attorney Camilo Salas III during a section entitled "The Claims Game."

Parker, a former IRS tax agent in New York City, warned attendees that, should attorneys file claims against BP - which has established a $20 billion escrow account to handle legitimate claims - the process could get murky for fishermen because many deal in cash.

"Many Vietnamese and Cambodian fisherman live on their boats and don't speak much English," he said. "They pay for their supplies in cash, for their bait in cash and their gas in cash."

The BP guy wanted my tax statements, but how can I pay taxes if everything I earned was in cash?

But foreign fishermen aren't the only ones affected. In a May 30 article in the Los Angeles Times, an anonymous crab fisherman said, "The BP guy wanted my tax statements, but how can I pay taxes if everything I earned was in cash?"

After the presentation, Becnel said that he and most of the lawyers he knows are providing their services and filing claims for fishermen free of charge.

"If we get something on the back end, so be it," he said. "If we don't, then we struck a lousy deal."


Speaking to the conference, Parker noted that there are many ways to prove a fisherman's income without tax returns, from invoices to receipts from cash transactions. But, he also warned that fishermen who show their income through alternative means could also build a case for IRS auditors who are watching out for tax evaders.

"I want to make you aware of this windfall for the IRS," Parker said. "They're looking forward to your client falling into the rabbit hole."

Even though the government won't likely prosecute a large percentage of Gulf fishermen, Parker said that the publicity from any suits will create "a ripple effect throughout the industry."

Parker said that there is a difference between a fisherman that makes "minor" mistakes and those whose tax returns report incomes that are thousands of dollars less than they really are, and between those who have never filed a tax return.

In the case of the fisherman in the vidoe, he could ahve filed a 1040-EZ for his bad years. It is likely the government would have sent him money if his income was less than $30,000.

Failing to file a tax return is just a misdemeanor while lying on a return is a felony. He also said fishermen who are proactive could avoid major repercussions.

"I've never heard of the IRS going after a client that makes the IRS aware of discrepancies," he said. "If a shrimper came forward and amended their return, I think they're going to be just fine."

But even if fishermen choose to go back and amend returns, the amount of back taxes and interest they owe the IRS may be greater than how much they would earn from BP by filing a claim. All of it presents a quandary for lawyers representing Gulf fisherman.

"I don't know what to tell you to do," Parker said. "I want to make you aware of this windfall for the IRS."

Parker said a fisherman's best bet would be to file taxes if they haven't already and hope that the back-taxes, interest and penalties doesn't outweigh how much their BP claim.

Rightardia is also unsympathetic. The man in the video hasn't filed taxes for three years which is against the law. You might think fisherman's salaries are small potatoes, but that isn't true either. 

A fisherman, who owns his own boat, can easily make $70,000 a year, but it is very hard work. 


Rightardia has also pointed out that the right wing complains that 40 per cent or more of Americans don't pay taxes. Most of these people are Red Staters like the Gulf coast fisherman. 

It's gets even deeper. If thy fisherman aren't paying Income Tax, they aren't paying FICA payroll tax either which means they will have minimal special Social Security benefits when they reach retirement age. They will also be denied Medicare benefits if they don't have 40 quarters of FICA payments.

For all intents and purposes, when these scoflaw fisherman reach retirement age, they will be on welfare. 

source: http://littlegreenfootballs.com/page/218847_Fishermen_failed_to_report_all

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