Quapaw Canoe Company Tax Assessment 2009-2012
February 23, 2014
From: John Ruskey, owner, Quapaw Canoe Company
To: All of our Friends, Colleagues and River Family:
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 gross error. We are in the process of proving so with a legal/accountant team. We are simultaneously pursuing legislative action. We need help paying $25,000 in legal and accounting fees that have been accumulating for 2 years, so that we can carry our fight to the next step with the DOR and in the Mississippi State Legislature to make a permanent change to the tax code.
I hate asking for anything, but we need help. We are setting up an accounting/legal defense fund for QCC through Indiegogo. We are currently in debt around $20,000 in legal/accounting fees and anticipate $5,000 more in the next 2 months. Every dollar we receive as result of this campaign will go directly to paying that mounting debt, and for no other purpose.
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 complete assessment $41,000 plus accumulating legal/accounting fees $25,000 = $66,000 total. We might have to sell property to make this payment, but with your help in paying legal/accounting fees 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 ($25,000). Your contribution here will makes sure we complete that payment without hitch and continue our services to nature tourism and the youth of the Lower Mississippi Valley.
We at Quapaw Canoe Company want to get this set right in the tax code 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.
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. With your help we will be able to fulfill all QCC commitments now active for 2014 and 2015.
On behalf of all the Mighty Quapaws thank you for reading this letter and making a contribution to our accounting/legal defense fund. If you have any questions, or would like to see any of the detailed evidence for the above, please contact me at the below.
Yours humbly in the service of the big river,
John Ruskey
Quapaw Canoe Company
291 Sunflower Avenue
Clarksdale, Mississippi, 38614
662-627-4070
john@island63.com
