Local Governments Mining for Dollars
As a small business owner, a huge portion of my time is spent feeding governments with all the paperwork they demand. But this year has been twice as bad. Every local authority we operate in has started mining for dollars. What this has meant is a whole slew of property "reassessments" that have no basis in reality (e.g. values put on non-existent assets) that I have to spend a lot of my time fighting. The general modus opperandi is to declare my company owes money for something fictitious, and then make us prove we don't. Have you ever tried to prove you don't own an asset that doesn't exist? Think about it. How would you go about it, short of inviting the assessor out to your property to search for it.
Maricopa County, the county that includes Phoenix where my headquarters resides, has been the worst. We buy assets for properties all over the country, and have the bill sent to our headquarters. Often, if a registration is required, we will put our headquarters address on the government registration to make sure we get the renewal paperwork (long experience is that if anything gets sent out to an address in the field, it is lost). The concept that an asset might be in location X but the paperwork should be sent to location Y is a really, really hard concept for a lot of state registration authorities to get their head around/
This year, Maricopa County has started sending us personal property tax notices for all kinds of assets that have never even existed in this county. They were bought in state A, shipped to state B, with the bill sent to us here in Arizona. But the County is in financial distress. It probably understands that the asset does not exist in the County. I am sure it knows that I don't, for example, have 24 cabins sitting on the fourth floor of this building, where they have them located. But they need money. If they send out enough fraudulent bills, and then tell taxpayers it is the taxpayer's responsibility to prove the bill is wrong, then they will likely get some money. Yet again, the government is engaging in abusive practices that not private company could get away with for long.
I was pretty calm today on the phone with the assessor until this came up:
Me: Look, these are cabins I bought from a factory in Maricopa County but which were shipped immediately from the factory to California.
Assessor: I don't see where you filed for permission to move the cabins
Me: Excuse me?
Assessor: Your xxxyyy form [I forget the numbers]. You never filed for permission to relocate
WTF? I know we have problems with declining tax roles, but do I really have to ask permission to move an asset out of the county or state. What, did I violate directive 10-289?
So beware small businesses. Your government is mining for dollars -- do not assume that tax bill is correct.
DrTorch:
Perhaps Senor Assessor should be informed that if you never want to break the "law" again, so you'll send your business of fabricating cabins to somewhere OUTSIDE of Maricopa County.
September 25, 2009, 9:15 amChris:
The sales tax auditors are out in full force in New York State. I'm waiting for them to tell me that my capital improvements were sales-taxable and that I should have paid sales tax twice on a minivan...
September 25, 2009, 9:29 amperlhaqr:
Yuck.
I don't think I have the proper temperament for business.
"You're goddamn right I didn't file for fucking permission, you evil little shit."
September 25, 2009, 9:50 amscrumble:
I happen to be in Phoenix at the moment exploring locations to re-settle a business. Between watching the local news this past week, observing the area while driving around, talking with locals, and reading the posts on this blog, I have decided to pass on relocation here and go look in other states. Even though I've "resided" in Arizona for an entire week, I will hopefully assume I have permission from the local authorities to take my out-of-state self and vehicle out of here paying nothing more than gas taxes.
Keep up the interesting and informative commentary
September 25, 2009, 10:06 amLoneSnark:
Does anyone on here know of a mythical utopia that doesn't do this shit? All I know is that it is not in North Carolina. Has anyone checked Wisconsin?
September 25, 2009, 10:47 amEvil Red Scandi:
Funny how if we knowingly send out a bogus or inflated invoice it's mail fraud and we can go to prison. When they do it, it's just mining for dollars.
September 25, 2009, 11:15 amAllen:
Reminds me of the IRS and how even though they have the w-2 records, if for some reason they don't have your tax filing they just assume that you didn't pay any taxes on what you owe. The same with capital gains.... it's rare that anyone "buys" a stock for $0 yet that's the assumption they make unless you supply them with paperwork proving otherwise.
September 25, 2009, 1:45 pmDudeman:
Lonesnark:
September 25, 2009, 1:59 pmI assure you the Utopia you seek is NOT Wisconsin. The State charges a sales tax (reported on the State Income tax form) on internet purchases; and a 14% tax on access to the internet. Try South Dakota.
Angus S-F:
I'm with DrTorch, vote with your feet. You could certainly run your business from somewhere outside Maricopa County. You could also get a maildrop outside the county limits so all your assets never "touched" Maricopa soil ;-)
FWIW I am in the process of moving my business outside the Tucson city limits to Pima County in part to get away from #%!#$%!@#$!@$ city regulations.
September 25, 2009, 6:32 pmDan:
Yep - this year I got some interesting mail from my pals in Sacramento. They claimed that two years ago I somehow didn't pay taxes or claim income on roughly $100k that I had been 1099ed for. The 1099 in question that they referenced? Filed with my company's tax id. The income in question? My SSN. Had they looked at the paperwork that they had to use in the first place to tie those two together, they would have seen the 1099.
Fortunately for me, my accountant straightened it out for me. I pay him $1,500 a year to keep such things straight.
PS - in case anyone is confused, the $1,500 that I pay my accountant just to honestly comply with the tax laws is NOT a tax. It is a broken window.
September 25, 2009, 7:34 pmBen:
Had a similar experience with the State of California. They sent me a state income tax bill for 20k for the year after I moved out of California to Washington, then threatened all sort of penalties if I didn't pay them immediately. Of course, the burden of proof was on me to prove that I wasn't living in the state at the time, with my own time and money. After multiple phone calls, involving lengthy holding times, and multiple mailings, it was cleared up. Luckily, I was able to resolve it without sending a check, which I knew I probably wouldn't get back again.
September 26, 2009, 9:32 amM Heiss:
Wisconsin is the pits. We moved from WI to AZ in 2005 and our property taxes are 25% of what they were in Wisconsin, on a similarly priced property. Many franchise businesses and restaurants do not exist in Wisconsin. They locate in Illinois instead! If the business climate in ILLINOIS is preferable to the business climate in your state, I'd say there's a problem.
How about Utah for Galt's Gulch?
September 26, 2009, 12:55 pmspiro:
My favorite tax that I have encountered with my business is the county "business property usage" tax that we have here. In a nutshell, I get taxed annually for every item that is involved in the daily operation of my business. So, every shelf, computer, desk, etc that sits in my office/store gets taxed by the county. Even though I paid sales tax on these items when I purchased them and assembled most of them my self, the county gets to collect on them because.....they exist? At least that was the basic answer that the assessor gave me.
Realize that even if I make $0 in gross sales this year, I will owe several hundred dollars in taxes on items that I purchased and still possess and that were taxed similarly owning last year, and the previous year.....
No wonder all of us business owners are so filthy rich /sarcasm
October 1, 2009, 12:57 pm