Quapaw Canoe runs into turbulent waters with bills from state tax department

by Becky Gillette

Published: February 21,2014

Tags: business Clarksdale, Mississippi, outdoors, tourism

John Ruskey says his company might not survive the tax fight it is in with the Department of Revenue.

John Ruskey says his company might not survive the tax fight it is in with the Department of Revenue.

CLARKSDALE — The only nature tourism business in Mississippi that takes people out in canoes padding the Mississippi River has run into a major logjam that threatens to force it out of business. Quapaw Canoe Company, which builds the large canoes used to take people on educational canoeing trips on the river, has been hit with a tax bill now totaling $41,000 while also running up $20,000 in bills for accountants and attorneys to fight what the business believes is improper taxation.

“I’m not sure if we’ll survive the fight,” said John Ruskey, owner of Quapaw Canoe Company in Clarksdale and in Helena, Ark. “The root of the problem is that there is no place in the Mississippi State Tax Code for us. The federal law says no taxes shall be charged on navigable waters. We have always operated under the assumption that we would be covered under that law and have never charged taxes for our services, although we have for sales and rentals. Now the Mississippi Department of Revenue wants to assess us for taxes on all of our income for the past four years, which now amounts to over $41,000 including interest and penalties.”

READ MORE — (Update) Quapaw Canoe Company gains legislative support in battle with tax department

Quapaw is even being charged tax on income sources like schools, non-profits and government agencies that are not normally considered taxable. Ruskey is trying to figure out how to resolve this — not only for them, but anyone else following in their footsteps in nature tourism, here and in the rest of the Deep South.

John Ruskey

John Ruskey

“Whatever we do here is likely to be mimicked in other Southern states,” he said.

States like Utah and Idaho with long traditions of river runners have dedicated whole sections of their tax law in accordance with the federal exemption. States such as Tennessee have honored the federal exemption.

In a state that provides millions in tax incentives to bring new industries and jobs to the state, Ruskey is a bit perplexed at the anti-business attitude of the Mississippi Department of Revenue. Even after he hired accountants and attorneys and went before the department’s Board of Review citing the U.S. Rivers and Harbors Act, the department has remained deaf to arguments about the federal law.

Running the turbulent river is enough of a challenge. It can be dangerous and requires a lot of commitment and planning to do it safely. But this may be a bigger challenge than the ever-changing river.

“We are faced with a possibly insurmountable challenge from a source that has responded with no goodness, no forgiveness, and no attempt to comprehend the nature of who we are and what our business is,” he said. “Situations like this shouldn’t get in the way of developing businesses, especially developing industries like ours, nature tourism. We have a unique slant to it because we are on a river that no one else paddles on and we operate as an education organization. All of our trips involve history, geology and geography. Then we also do a lot of work with the youth of the Mississippi Delta with apprenticeships. We have actually raised a whole generation of paddlers who are now big river paddlers and guides. I’ve personally trained some of them for almost a decade now in the rigors of the quite dangerous Mississippi River.”

The consequences of the battle by this small ecotourism company against the tax department could have impacts far beyond one business. Paddling is the fastest-growing sport in the country. There are currently 24 million paddlers in the U.S., and more people are starting to paddle long distances on the Mississippi River. Mississippi paddler events such as the Bluz Cruz Race in Vicksburg, and Phat Water out of Natchez are increasingly popular.

Quapaw_rgb“The Mississippi River is getting more and more recognized as one of the great outdoor adventures available in this country, as it should be,” Ruskey said.

Ruskey said the Department of Revenue should get on board with what the Mississippi Development Authority is doing to help businesses survive in a very challenging economy.

“From my perspective, it seems unfair,” Ruskey said. “The federal law says you can’t charge taxes on a navigable waterway unless that tax is going back directly into benefiting the business. Personally, my biggest hope is we can get this set right so it paves the way for more businesses like ours to be able to pursue this very healthy endeavor. Everything about paddling is healthy. It is good exercise. People are reconnected to the environment. Study after study shows people who engage in outdoor activities are happier.”

Having the huge tax bill hanging over the head of a business that ended up with only $5,000 in the bank at the end of the year is making it hard for Ruskey to concentrate on the business.

“It is very distracting,” he said. “It has instilled in me a paranoia about being able to continue to make a living. We are a small company. We don’t have a secretary. I answer the phone. I answer the emails. I empty the wastebaskets. I document and research water, weather and geographic conditions, and create a river manual for each trip. It is a very demanding business. It is actually dangerous for our operations to be too distracted. I have to be out as guides for scouts, church groups, school children and others. Their lives are in our hands. I have to focus 100 percent of our attention on safe travel on the Mississippi River.”

The company is currently preparing to appeal the Board of Review denial to the Board of Appeals. If the Board of Appeals also finds against Quapaw, the company can take the next steps afforded taxpayers appealing to the chancery court and, if it doesn’t prevail there, the Mississippi Supreme Court. But each of those steps is very expensive and time consuming.

Ruskey said the long process makes him feel like he is locked up in a glacier. But he is hopeful that, in the end, the right thing will be done for his business and any other ecotourism businesses that sprout up in Mississippi.

“We are the State of Mississippi,” he said. “Our name comes from the great river. Honoring the federal law in our tax code would be just another way to honor our river and its potential for our state.”

The Mississippi Department of Revenue declined comment, and said confidentiality laws prohibit the agency from discussing individual cases.

 

[RSS Feed] [del.icio.us]



To sign up for Mississippi Business Daily Updates, click here.

15 Responses to “Quapaw Canoe runs into turbulent waters with bills from state tax department”

  1. Tommy Shropshire Says:

    Obviously Mississippi’s tax codes haven’t considered nature tourism as a Mississippi business. I’m not a fan of more regulations but something has to be done to encourage businesses like John’s. We give huge tax incentives to large corporations but do little if anything to give individuals like John a reason to set up business in Mississippi. Please help John stay in Mississippi.

  2. Lisa Sammons Says:

    PLEASE help John stay in business!!! I live in Tennessee and support as many of these Outfitters as possible! They are vital to our economy.

  3. melinda neill Says:

    Come on folks, lets write some letters!

  4. Magnolia Moon Says:

    John and the Mighty Quapaws contribute so much to educating young people, with respect to themselves, others, to the land, waterways, and tourism. John is truly a renaissance man and I think Mississippi should and could support him. What he has to offer the state should be recognized, and applauded. Mississippi needs more people like him, not alienate true good guys.

  5. Once Again, the Mississippi River is “a place set apart” | River Life Says:

    […] that taxes shall not be assessed on activities taking place on navigable waterways.  As this article from the Mississippi Business Journal makes clear, Ruskey and his company are in imminent danger of going out of business or, at the very […]

  6. Richard Day Says:

    There is “RIGHT” and there is ‘WRONG”. To claim John Ruskey dba Quapaw Canoe Co., is liable for these taxes – W R O N G!

  7. Leon Pantenburg Says:

    In 1980, I floated the Mississippi river from the headwaters to Venice, Louisiana. Later I went to work for the U.S. Army Corps of Engineers in Vicksburg, MS.
    The Mississippi is a huge draw to people from all over the world. Having an ecotourism busines based in Mississippi brings business to the state, and provides a valuable service to young people who need to get out and experience the outdoors.
    I currently am a multi-media instructor/advisor at a community college in Bend, Oregon and operate the wilderness survival website SurvivalCommonSense.com.
    From both perspectives, I have seen a real necessity to provide these types of wilderness experiences to people
    Who do I contact to register my concerns?

    Sincerely,
    Leon Pantenburg

  8. Richard Day Says:

    Leon: Just in case your request is not answered in a timely fastion; (not likely) – here is John’s contact info – as 1st source. As another supporter, thanks for your interest.
    John Ruskey
    Quapaw Canoe Company
    Lower Mississippi River Foundation
    291 Sunflower Avenue
    Clarksdale, MS 38614
    http://www.island63.com
    cell: 662-902-7841
    office: 662-627-4070

    John; Hope you don’t mind that i jumped in here on this one.

  9. Merry Says:

    Should we voice our concerns to the Attorney General, Governor or Lt. Governor? I’ve heard many complaints recently about the State Revenue Collectors developing ‘new interpretations’ with contractors and subcontractors. Now this. I suppose we could send letters to all of the above. Infuriating.

    Big Businesses like Nissan come in with all sorts of tax breaks. Give small business a break.

  10. Jefferson M. Brown Says:

    As one of the 24,000,000 other canoe and kayak paddlers mentioned in the article, I think it is an outrage that state officials are trying to balance the budget on the back of all ONE of the Mighty Mississippi’s canoe outfitters in the area. Mr Ruskey started this from nothing, even to the point of building his own boats. He and Quapaw Canoe Company are trying to promote your state’s tourism image. Instead of being levied out of existence, someone ought to award them with an Entrepreneurial Partnership Grant to market and expand this leading-edge business.

    I’ve never met John, but I started a similar business in Kansas 25 years ago, Ottertail Outings, so know how much work and care go into this kind of enterprise. Please don’t lump me in with the nobody-should-ever-pay-taxes-for-nothing crowd: taxes are important. Celebrate Mississippi — the Nissans being built in Canton, the aircraft engines being built in Mobile, and Mississippi River tourism, aka Quapaw Canoe Company.

  11. Andy Bassett-Scott Says:

    Sadly this is another soft target option. Instead of helping small business to manage their tax system efficiently the US government, much like our UK government, sees the small business as ‘cash cow’ that can be milked and then once dry cast on to the scrap heap.

    While at the same time the hugely bloated corporates have their highly salaried tax lawyers and accounts siphon off and hide away millions of pounds and dollars in tax revenue and this is ‘legal’. When businesses do hit times like this I agree that the revenue should be paid fairly but there must be education and support for these businesses to thrive effectively.

  12. John Ruskey Says:

    Thanks all for these thoughts, stories, commiserations. Its good to know we’re not alone (we’ve felt that way in the past) Jefferson, I got your message, I’ll call back. Leon Patenburg: like to hear more about your 1980 canoe trip down the Mississippi. You can sign our petition and if you do please write more comments there that will go to those concerned within our legislature. Go to our online petition at change.org: https://www.change.org/petitions/gov-phil-bryant-recognize-and-adopt-the-national-maritime-transportation-security-act-of-2002-into-the-mississippi-state-tax-code-for-exemption-of-taxes-on-river-guiding-companies. Thank you and many blessings! *Note: we actually have 2 bills that emerged this past week in the statehouse, HB1604 and SB2972. More on that soon.

  13. John Ruskey Says:

    For Immediate Release: SB2972 and HB1604

    We’ve had a remarkable legislative breakthrough in this past week. If passed into law we (and any businesses like ours) will be exempt from taxes in the future.

    This is good news for the future of nature tourism along the Lower Mississippi River. Please contact any Mississippi Senators and Reprsentatives you know, especially in the Finance (Senate) and Ways & Means (House) Committees, to support and vote for HB1604 and SB2972. These are not retroactive. They will not rectify our 2009-2012 situation with the DOR, nor take care of any legal/accountant fees. But it will pave the path for future fair treatment on the river for us and any others involved in this type of nature tourism.

    The river angels must be watching over us. Thanks to all of you for your prayers, petitions, and acts of kindness and generosity. Thank you all for believing in us, sharing your feelings about the river and our services, and for standing beside us in this fight!

    You can Track the Bills:
    http://billstatus.ls.state.ms.us/2014/pdf/history/SB/SB2972.xml
    http://billstatus.ls.state.ms.us/2014/pdf/history/HB/HB1604.xml

  14. Melissa Blackburn Says:

    John, I recently subscribed to MBJ E-Bulletin after my fiance, Cliff Geter, sent me this article. I support you and your service and thank you for the countless hours and rivertime you have spent educating so many folks about the mighty Mississippi. I was surprised that MS DOR was in contradiction with the Federal Tax code exemption of sales tax on businesses operating on any Federal Navigable Waterway. I checked on the status of S.B. No. 2972 today and saw it had passed. I was dissappointed to see it was not retroactive.

  15. Quapaw Canoe Company gains legislative support in battle with tax department - Mississippi Business Journal Says:

    […] » READ MORE — Quapaw Canoe runs into turbulent waters with bills from state tax department […]

POST A COMMENT

 

Twang & Tourism: The Country Music Trail

Our annual "Come See Us" magazine offers ideas for spots in Mississippi ranging from golf to culture to history to food. Click the photo for ideas, stories and access to the digital edition of this year's magazine.

Still planning that summer vacation?

Our annual "Come See Us" magazine offers ideas for spots in Mississippi ranging from golf to culture to history to food. Click the photo for ideas, stories and access to the digital edition of this year's magazine.

FOLLOW THE MBJ ON TWITTER

Top Posts & Pages

%d bloggers like this: