As a favor to our friends and neighbors at the Quapaw Canoe Company, heres John Ruskeys guest column, in its entirety: Quapaw Canoe Company Tax Assessment 2009-2012 March 5, 2014 From: John Ruskey, owner, Quapaw Canoe Company To: our clients, contractors, partners and collaborators Quapaw Canoe Company (QCC) is being assessed by the Mississippi Department of Revenue (DOR) for $37,000 in taxes for 2009-2012. We believe this assessment is in error. We are in the process of proving otherwise with a legal/accountant team. We are simultaneously pursuing legislative action. Please know that we will fulfill all current commitments with any and all clients, contracts, partners and collaborations for 2014 and 2015. The root of the problem is that there is no place in the Mississippi State Tax Code for our type of services (outdoor educational adventures, river guiding & outfitting). Federal Law says no taxes shall be charged on navigable waters. States with long traditions of river runners (like Utah and Idaho) have dedicated whole sections of their tax law in accordance with this federal exemption. States like Tennessee have honored the Federal preemption in rulings involving guiding companies on their rivers. We have always operated under the assumption that we would be covered under the same, and have never charged taxes for our services (although we have for sales and rentals). Now Mississippi wants to assess us for taxes on all of our income (regardless of source or service) for the past 4 years, which now amounts to over $41,000 (including interest & penalties). This includes income sources like schools, non-profits and government agencies (and other entities not normally considered taxable). My legal/accounting team has demonstrated that most of the DOR assessment is incorrect and we are taking the necessary steps as taxpayers: 1) the Board of Review. 2) the Board of Appeal. 3) The Chancery Court. 4) The Supreme Court. On November 7, 2013, we met with the Board of Review, which had no result. We have a date with the Board of Appeal for August 20, 2014. Unlike the Review Board (which is all DOR employees), the Board of Appeal is an independent triumvirate of three CPAs and attorneys appointed by the Miss Governor. Hopefully they will be more rational in their understanding of the assessment. However, if that fails, we might take it to court, which would be costly and time-consuming. The other route we are actively pursuing is through the Miss Legislature. The most obvious solution lies in the 2002 Maritime Transportation Security Act (refreshed with the 1884 Harbors and Rivers Act) which explicitly states that No taxes, tolls, operating charges, fees, or any other impositions whatever shall be levied upon or collected from any vessel or other water craft, or from its passengers or crew on navigable rivers.” The Mississippi River is a navigable river. We are pursuing this action through our state legislature, but time is running out for the 2014 session (ends Feb 28th) There is a very slim chance we might be able to attach something to a current bill. More likely we will have to create a new bill for the 2015 session. Worst case scenario: all plans of action fail and we are required to pay original assessment 2009-2012 (41K) plus additional 2013/2014 assessment (20-30K) plus accumulating legal/accounting fees (25K) = approximately 100K total. We might have to sell property to make payment, but this shouldn’t compromise our essential services and operations. We won’t know final decision until the Fall of 2014. We would be allowed one year to make payment. Best case scenario: the DOR removes all charges, and the State of Mississippi adopts the Federal preemption into the tax code for river guiding companies. Our only liability is payment of the accrued accounting and legal fees. We might initiate a QCC fundraiser if this is the case. We at Quapaw Canoe Company want to get this right if at all possible, for our future and for the future of anyone else who has any business (or any dreams of creating a business) involving the Mississippi River. The adoption of this act into the tax code will insure the success of nature tourism in Mississippi. And not only for us, but anyone else following in our footsteps along the Lower Mississippi, such as in Louisiana and Arkansas. Whatever we do here is likely to be mimicked in other Southern States. The Lower Mississippi River Foundation is an entirely separate corporation and is not involved in any part of the assessment. This assessment involves only Quapaw Canoe Company. As stated we will fulfill all QCC commitments now active for 2014 and 2015. In conclusion, I sincerely hope we can straighten this out with an amendment of the Mississippi State Tax Code, or some similar measure, for our own future and for the future of all small businesses involved in nature tourism along the Lower Mississippi River. If you have any questions, or would like to see any of the detailed evidence for any of the above, please contact me at the below. Yours humbly in the service of the big river,
Posted on: Fri, 07 Mar 2014 15:23:10 +0000
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