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Cash Business In Gulf Makes Compensation Difficult

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Cash Business In Gulf Makes Compensation Difficult


Cash Business In Gulf Makes Compensation Difficult

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Now to a difficult truth about many Gulf Coast businesses affected by the oil spill: Many are cash operations. They don't report their income and haven't been paying taxes on much of what they make. That's causing problems for some of them now. NPR's Yuki Noguchi has this report.

YUKI NOGUCHI: Bobby Barnett is a fishing veteran here in Pass Christian in southern Mississippi. His boat works near the Bay of St. Louis, which connects to the Gulf of Mexico. Normally Barnett would be catching oysters and shrimp and selling them at the dock.

Mr. BOBBY BARNETT (Fisherman): We sell a lot of cash, you know, cash shrimp.

NOGUCHI: Cash is king in the fishing industry. Many fisherman and residents say a large if unquantifiable amount of the Gulf Coast economy operates this way. It's an economy that for generations has been kept in the shadows of the Internal Revenue Service.

It's a sore subject now. Since the spill, many of the fishermen haven't been able to work, and they want to collect payment from the $20 billion compensation fund BP set up.

Danny Lee works for Boat People SOS, a Vietnamese-American community organization. His group and others recently offered legal counsel to fishermen at an event in Biloxi.

Mr. DANNY LEE (Boat People SOS): They sell, you know, to the local people. And basically it's a cash business, and they don't actually keep track of how much they're selling. But the big concern is that, you know, they don't know how they can come up with the proper documentation to show that they have a certain income.

NOGUCHI: Not paying taxes is, of course, illegal. But St. Bernard Parish President Craig Taffaro says it's unfair to penalize the fishermen now for past misdeeds.

Taffaro, who was at a recent open house for parish residents in Chalmette, Louisiana, says he wants to see a tax amnesty program for oil spill victims who've been operating under the table.

Mr. CRAIG TAFFARO (St. Bernard Parish President): Well, we need to make sure that what we do is, okay, here's your opportunity, you get in the game, you get financially compensated for your losses, but now you're in the system and you're going to have to live by the same tax codes that everyone else lives by.

NOGUCHI: Chad Lauga is a political director for a Louisiana AFL-CIO chapter. He says the cash ecosystem extends far beyond just the fishermen and shrimpers. Seafood buyers at the docks, for example, offer more per pound if they can pay fishermen with cash.

Mr. CHAD LAUGA (Louisiana AFL-CIO): That the dock guy, so if he don't have to pay the taxes, okay, if he's avoiding his taxes by paying this shrimper with cash, and the shrimper, he's sitting there saying, man, I'm getting more money for my product if I take cash - well, I mean, it's a no-brainer what everybody's going to do.

NOGUCHI: And so it goes on down the line, Lauga says. Many lawn workers and boat repair people are also mostly paid in cash, and they don't get 1099 tax forms in the mail at the end of the year.

Lauga is quick to say, as a taxpaying citizen himself, he doesn't think skirting taxes is right. But he also doesn't want to see his friends and neighbors go to financial ruin because they can't collect from BP. He's lobbied the Louisiana State Congress, but isn't encouraged.

Mr. LAUGA: I don't think there is a solution, to be honest with you. I think the senators and representatives want to help their constituents, but I think their constituents are kind of behind the eight ball here.

Mr. KENNETH FEINBERG (Compensation Fund Manager): We can't be violating the law in distributing money.

NOGUCHI: Kenneth Feinberg was recently tapped to run that $20 billion compensation fund that thousands of fishermen are now trying to access. Feinberg says he cannot and will not have any role offering amnesty himself to those who can't document their income.

Mr. FEINBERG: If Congress wants to modify the tax law to provide for such payment, that's fine with me. I just have to make sure that the facility is complying with all applicable laws.

NOGUCHI: Until now, all the compensation checks have been to make initial emergency payments, with only minimal documentation required. Feinberg says so far he hasn't fielded requests for compensation from people with undocumented cash income. As the fund starts to focus more on longer term compensation, he says, that might change.

Yuki Noguchi, NPR News.

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