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The fishermen and the tax man

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.

May 30, 2010|By Louis Sahagun, Los Angeles Times

Reporting from Delacroix, La. — — 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, they often get paid in cash — and don't always report it.

"I worked for an uncle last year who paid me in cash," said a crab fisherman who asked to remain anonymous. "The BP guy wanted my tax statements, but how can I pay taxes if everything I earned was in cash?"

Many people involved in the seasonal harvesting of shrimp, crabs, oysters and fish — boat washers, fishermen, crab cookers, deckhands, dockworkers — said they felt caught by a pincer of environmental devastation and an assistance program that could expose them to the tax man.

Not surprisingly, only a few folks here were willing to talk openly about the dilemma.

"We have our own little world, and the whole world is invading it right now," said Erwin Menesses, 43, who specializes in sewing and repairing fishing nets. "You are not going to find our legacy in the paperwork they are asking us to produce. It's not there."

Another man, who asked that his name not be used because he does not report income from selling hundreds of pounds of blue crab cooked each week in his garage, said he worried BP would turn over records to the Internal Revenue Service.

"That puts you in the system," he said. "If the numbers don't add up, people who have not been paying taxes are going to regret it."

BP officials said that more than 25,000 claims had been submitted and that more than 12,000 payments totaling about $36 million had been sent to people facing financial ruin. As part of an effort to resolve disputes, BP on Wednesday said it would appoint an independent mediator to help review and process claims.

Local elected officials this week began discussions with BP aimed at persuading the company to revise the way it processes claims in order to accommodate people who live and work on the edges of civilization and never bothered to maintain detailed financial records.

"We want BP to know that their calculations have not been comprehensive enough," said St. Bernard Parish President Craig Taffaro. "We are talking about people who are scraping by and frightened, and don't think in terms of corporate America. All they want is to return to work and live life the way they have for generations."

Plaquemines Parish President Billy Nungesser agreed. "The question I'm asking BP to consider is this: What are you going to do to make sure the guy who helps unload boats for tips, or the elderly lady who sells shrimp at the corner for a few bucks, gets adequately compensated?"

In an interview, BP spokesman Graham MacEwen said, "BP Chief Operating Officer Doug Suttles has been telling parish council members over the past few days that if someone's tax documents are not available, we will find other metrics. I don't know exactly how we are going to do that yet."

In the meantime, the problem has people on edge in remote bayou neighborhoods such as Delacroix, a lush narrow island about 4 miles long that is home to alligators, gnarled oaks draped with Spanish moss and hundreds of permanent residents, many of them descendents of Spanish Canary Islanders who settled here in the late 1700s.

Only a few months ago, the chatter on Delacroix's rickety wooden docks was optimistic. Five years after Hurricane Katrina, fishermen and seafood wholesalers were predicting record sales of shrimp and blue crabs.

Standing at the edge of a dock fronting a tawny river shimmering with minnows, Curtis Morales, owner of Island Seafood wholesale company, said, "Every year since 2007, product unloaded on this dock has increased by half a million pounds."

Morales, who said he keeps meticulous records, recently received an interim check from BP for $5,000. But he likes to tell of a less fortunate woman he saw at a local disaster center while waiting to submit his claim.

"This woman in the line next to me told the BP processor she earned $800 a week — in cash — as a deckhand," he recalled. "When he asked her for tax statements, she said she had not filed a federal income tax form since 2000. Then she said, 'I need a check from you so that I can pay back taxes and then show you the tax records.'"

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