Tuesday Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.
Those in the fish industry in the Louisiana bayous are learning a very hard lesson. BP has set aside a lot of money to reimburse those who have lost their livelihoods. All these people have to do is to prove it by showing proof of income – like a tax return. Problem – these people don’t file. They deal in cash.
Should they be compensated for what they say they have lost?
One Louisiana county official argues that the government should offer amnesty to them if they promise to pay their proper taxes in the future. He suggests that as there is a separation between church and state, there should be a separation between a tax obligation and the ability ‘to validate appropriate compensation to these fishermen.’
Would you vote for Charlie Rangel if he promises to be ethical in the future?
Cheating on the income tax, buying an item from a local merchant in cash to avoid sales tax, or working off the books is a way of looking at the government as ‘them’ rather than ‘us.’ (You know, that document that begins with “We the People.”)
The fact is, tax evasion is a crime, and failing to report all of one’s earnings can have other consequences. For example, if you have been working off the books, and you now need to show more earnings to buy a house, or you bought an expensive piece of jewelry for $10,000, but to avoid sales tax, you paid mostly in cash. What value do you tell the insurance company? Are you tinkering with insurance fraud?
Times are very tough, but for many, they have always been. Tell yourself a little lie, and over time, it becomes the truth.
Is it worth the sleepless nights and stomach pains?
Should the Louisiana fishermen be compensated?
Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.