Posted on 06/22/2010 11:02:05 AM PDT by Nachum
NEW ORLEANS — Out-of-work Gulf Coast shrimper Todd Pellegal spent his first $2,500 check from BP quickly, paying off bills and buying groceries for his family.
He never even considered putting some of it away for taxes.
Now he's among the people up and down the Gulf Coast reeling from the oil spill disaster who are surprised — and frustrated — to find out the Internal Revenue Service may take a chunk of the payments BP PLC is providing to help them stay afloat.
(Excerpt) Read more at foxnews.com ...
You've borken the code. Destroy red-states, destroy an oil company, create new precedents for seizing power and make 5 billion in the process. What more could a man-child want.
Fishermen.....not drill workers.
BP should pay the taxes on it. But, that being said, the IRS has the reputation of kicking people when they are down. Keep the people broke and you have control of them.
After all, he probably didn’t pay taxes on his former income....
D’OH!
“Did the guy think he was going to get a total free ride”?
...as a matter of fact, yes! This does seem to help bite the kenyan in the ass as the bad guy since most Americans think on the same terms as the shrimper.
“BP should pay the taxes on it”
We have defined a new stuck-on-stupid syndrome
“BPDS” = (BP Derangement Syndrome)
IRS rules for court settlements state that money received in compensation for missing wages is subject to income tax. This is not new. Current $20B fund is to compensate for lost wages. It’s not a court settlement, so there is room to argue in tax court . . .but . . . me guesses . . . the IRS wins.
The states will get their share too. States with an income tax will include the BP amounts when computing income subject to tax. Nothing new . . . this has been true for a long time.
If they were working their income should be taxed. I suspect a lot of them get paid in cash normally and the tax thing doesnt happen.
Unless they apply for a waiver.....=.=
I disagree, we shouldnt be giving the govt any of this money. The people need the help the most, not the disgusting govt.
Way to go Chavez, oops I mean Obama!
Actually, a case can be made that the Fed Gov is taking it on the chin. Without the payments, BP's income would have been higher by 20 billion. BP's tax rate would be about 35%. If the profits were distributed to shareholders as planned, the Feds cut would be another 15%. The feds would have gotten a combined 45% effective tax.
Instead the funds are being distributed to folks getting taxed anywhere from 0 to 35%. This results in a net loss to the Fed's of about 10-45% depending on the tax bracket of the folks getting the money.
I should have included 1099s, but you got my drift.
Or their tax returns showed vastly understated income due to the cash nature of their business. They probably took all their business deductions, showed just enough income to cover it. Which would make it hard to prove they are losing money by not working. They have kind of screwed themselves up in this deal. IMHO.
gee free money where do we get that? If the cost of clean up includes the coast guard who pays for that? What these folks need to do is go to BP with their tax return for last year and tell them I am losing ____ because I can’t fish - get all of it up front and then move the booms to clean up the spill. Maybe next year will be a good fishing year.
Compensation “to make you whole” is not taxed.
Sure it is, especially when you are being compensated for lost income that would have been taxable. You are no worse off paying a tax on a wage earned than on paying a tax on the same amount being paid to you because you did not earn a wage.
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