Robbed? You still have to pay taxes on lost money
Friday, January 20, 2006 10:37 PM PST
By Associated Press
Printable version
E-mail this articleOLYMPIA --- The cash was gone --- grabbed by a gun-toting robber --- but espresso-stand owner Roseann Carpenter still had to pay taxes on the money.
"That was kind of hard to take," Carpenter, proprietor of Huckle-Bearies Espresso & Ba Ke Shoppe in Aberdeen, told lawmakers Friday.
Carpenter's shop was the victim of a robbery May 27. To her chagrin, she learned that just because you don't have the money doesn't mean you don't owe sales and business taxes.
She brought the matter to the attention of one of her legislators, Rep. Dean Takko, D-Longview.
In response, Takko introduced House Bill 2459, which would exempt businesses from having to pay taxes on money stolen in a robbery.
Takko told the House Finance Committee he doesn't intend for the bill to apply to fraud or embezzlement --- just thefts that suddenly leave a shop owner without the cash but still holding a tax debt.
"If you don't have the money, how can you pay tax on it?" he asked. "It just seems the fair thing to do."
Carpenter said she's struggled to keep a coffee shop open in a depressed area, and it was a real blow when her shop was robbed on the Friday leading to Memorial Day.
"My busiest day of the year. I desperately needed it," she said. "A man came into the coffee shop with a gun. I had two children in the store. He said the children would be hurt if I did not hand over the money. He received $550. For an espresso stand, that's huge."
Police caught the robber a week later, but by then he had spent the money on heroin, she said.
Carpenter said her insurance has a $500 deductible. She passed on collecting the $50 --- which was just about the amount she owed in taxes --- to keep her premiums from increasing.
Carpenter said she expected to be able to tell the state about the robbery and not owe the tax.
"I didn't have the money. I made the assumption at the time, there must be a line (on tax forms) for deducting the loss," she aid. "I started looking for a deduction line, and there was nothing."
The Office of Financial Management estimates allowing a deduction would cost the state about $130,000 annually --- more the first year because the legislation would apply to thefts in the last four years.
The business owner couldn't claim a deduction if insurance covered the loss, or the money was recovered. The theft would have to be documented by police reports.
Department of Revenue lobbyist Gil Brewer said the department neither opposed nor supported the bill, though he said the legislation should spell out exactly what kinds of losses would be deductible.
Takko said he wanted to limit the deduction to cash losses due to thieves.
"This is for when the guy reaches into the cash box grabs a few hundred dollars, thousand dollars, whatever is in the cash box and runs," he said.
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