Mom always said to play by the rules. Well, like most things your mom told you, she was right.
According to several recent news accounts, many involved in the fishing and tourist industries that want to claim a share of the $20 billion fund that BP is required to establish to clean-up the Deep Horizon oil spill are having trouble showing their loss of income. It seems that some of the Gulf-coast service industries operate on a cash basis with little recordkeeping.
Is one of the valuable lessons to be learned from this very unfortunate man-made disaster that if you play by the rules you get rewarded? While several industries, including many contractors and service providers like the fishing and tourist industries, operate on a cash basis, that doesn’t mean they can’t keep good records. Those in these industries that have accurately reported cash receipts to the IRS will be the ones who can show incomes losses that have resulted from the oil spill. Those who may have benefited from short-term gains by not having claimed all of their cash income during some tax years may lose in the long run.
How Playing by the Rules is Important in Property Tax Assessments
In the property tax assessment arena, some owners of income-producing properties also found themselves in the losing categories. It seems that during the years when rents and vacancy levels were good and concessions low, many owners got into the habit of not complying with the local assessor’s request for income and expense information about their properties. For owners of income-producing properties who didn’t comply with these requests in 2008 and 2009 most were unable to get assessment reductions based on declining rents, increased vacancies, and concessions when the economy went sour. Even if you were one of those who rushed in and complied with say the 2009 request still suffered because the assessor didn’t have an established trend for your property. Most assessors like to have at least three consecutive years of income and expense information to establish stabilized income and typical operating expenses, just like a potential purchaser would.
Playing by the rules usually pays, if not in the short run, certainly it does in the long run where it matters most.
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