Welcome to Mystery Crime Blog

In 1998, if someone had told me I would be spending the next eight years of my life involved in injustice, I would have said "You are stark raving mad!". Well, I am here to eat those words.

In 1997, a friend was telling me about twin sisters, Betty Wilson and Peggy Lowe, from Alabama who were arrested and tried for supposedly hiring an alcoholic, drug addict con-man, James Dennison White, to kill Betty's wealthy husband, Dr. Jack Wilson, who was a very well-liked and well-known eye doctor in Huntsville. Both sisters were tried on the same evidence and lying testimony. Betty was convicted and sentenced to life in prison with no chance of parole because she was a rich bitch and slept with a black man in Alabama. Peggy, the saintly one, was acquitted. The convicted con-man, who never really admitted to killing the doctor, has come up for parole several times but is still incarcerated.

After spending six years studying this case including both trial transcripts, putting up an extensive website (http://hankford.com/bettywilson) and spending the remaining two years putting together a book about this case Killer For Hire - The Final Chapter of the Alabama Twins Murder Case, I, as many others, believe that the real killer of the doctor is walking around free. Neither of the twin sisters had a motive to have the good doctor put away but the doctor's ex-wife and son did.

As time permits, I hope to present other similar cases of injustice along with information on books, movies, TV shows, video games, etc., related to mystery crime. In the meantime please visit http://mysterycrimescene.com/.

Financial Rape - New Texas Franchise Margin Tax

Thursday, August 19, 2010

About three weeks ago the company I work for received a notice from the Texas Comptroller’s office regarding an audit of our 2008 and 2009 Franchise Tax Reports. This was apparently as a result of a new law that went into effect January 1, 2008. This new law came as a surprise to me because as far as I am aware we were not notified that the franchise tax had been renamed “margin tax” and service businesses could no longer deduct cost of goods sold. Now, they will be taxed on GROSS revenue (income). My company is looking at $12,000 plus taxes due for 2008 and $10,000 plus for 2009 which exceeds our NET profit. Even the IRS, bless its pointed head, allows a deduction for cost of goods sold.

It is being argued that the “margin tax” is actually an “income tax” which violates the Texas Constitution without voter approval. I don’t care what it is called. A rose by any other name would smell the same. My name for this new tax smells like “financial rape” of the Texas service industry and we don’t need any more people in the unemployment lines.

The following is from the Texas State Comptroller’s website:

“Franchise tax audits for report years 2008 and 2009 are now in full swing, and we've noticed that many entities in the service industry are incorrectly electing to use the cost of goods sold deduction to determine margin.

“Section 171.1012 of the Texas Tax Code specifically provides that, in determining the cost of goods sold, the term “goods” means real or tangible personal property sold in the ordinary course of business and does not include services. The Tax Code does not allow a cost of goods sold deduction for entities that provide services such as dry cleaners, law firms, parking facilities, rental services, towing companies, etc. [ETC equates to literally tens of thousands of service oriented business.]

“Franchise Tax Rule 3.588(c)(8) does allow a cost of goods deduction for transactions that contain elements of both a sale of tangible personal property and a service; however, an entity may only subtract as cost of goods sold the costs otherwise allowed in relation to the tangible personal property sold.

“For example, an auto body shop offers the service of car repair and in the process of the repair, replaces some of the car's parts. If the auto body shop elects to use the cost of goods sold to determine margin, the shop can only deduct the cost of the car parts. The labor related to the repair of the car is not allowed as a cost of goods sold.

“If an entity that is not eligible for the cost of goods sold deduction elected to use this method for prior years' reports, the entity must amend the reports. The compensation deduction, however, is not available for the prior years' reports. The election language in Tax Code Section 171.101(d) does not allow a change in the method of computing margin to a cost of goods sold or compensation deduction after the due date of the report.

“These entities that originally elected to use the cost of goods sold method must amend and use the 70 percent method to determine margin or, if total revenue is not more than $10 million, may use the E-Z Computation to determine tax due. The E-Z Computation does not allow a cost of goods sold or compensation deduction in computing margin but instead applies a lower tax rate of 0.575 percent directly to apportioned total revenue.”

Even at the lower tax rate, the taxes due can exceed the net profit of a business. Also in the example above of the auto repair shop, cost of parts can be deducted by not labor. Excuse me, this company like most companies is paying federal and state employment taxes on labor and now it will be also paying franchise taxes on labor. A company should not only be allowed to deduct the cost of labor but should receive a discount for keep people out of the unemployment lines! This is truly a service entrepreneur’s nightmare.

What puzzles me is many law firms are in the service industry. Wonder why there haven’t been any advertisements on TV for a class action law suit against this “financial rape?” Is this destined for the near future?

I have posted a petition at Texas State Franchise Tax aka Margin Tax is Unconstitutional.
Bookmark and Share