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By Jack Stewardson, Standard-Times staff writer
NEW BEDFORD -- It has hung for the past eight years like a sword of Damocles over the local fishing fleet.
The long-standing IRS dispute over crew withholdings threatened the viability of several score of fishing vessel owners trapped in a dispute that potentially might have cost what has been estimated as more than $10 million in back taxes, penalties and late interest charges.
But on Monday, however, finally, seemingly, it was all behind them as President Clinton signed a minimum wage law which included a rider to resolve the IRS standoff.
"It's a good day to celebrate,"' said Sen. John F. Kerry, D-Mass., who was instrumental in pushing the corrective legislation in the Senate, and who came to the New Bedford waterfront to share the occasion with members of the fishing industry. "It will mean people will not lose boats. People will not lose homes and people will not lose their ability to fish."
"It brings the suffering to a close,' said Sen. Kerry, who with Senator Edward M. Kennedy, D-Mass., and Representatives Barney Frank and Peter I Blute worked tirelessly to bring corrective legislation through Congress.
About 85 fishing vessels, mostly from New Bedford became ensnared in a dispute with the IRS back in 1989 when the tax agency completed a widespread audit within the industry for the years 1985-1987 and questioned what constitutes a self employed fishermen.
At issue was an IRS interpretation of a 1976 tax code provision defining when a fishermen could be considered self-employed for tax purposes and when the retain status as an employee.
The law considered fishermen to be self employed when while working on vessels normally manned by fewer than 10 crew members and who earned their income from a share of the trip proceeds. The IRS, however, targeted scallopers, which often carried more than 10 people at peak period of the year, and also singled out mates, cooks and engineers, who normally earned small nominal bonuses called pers in addition to their share of the catch.
Fishing vessel owners won a partial victory in October, 1994 when a U.S. Court of Claims Judge ruled the IRS had vaguely defined what it meant by normally fishing with less than 10 men, but also ruled those who collected pers were employers for tax purposes.
The corrective legislation, which is retroactive, enables a fishermen to earn up to $100 in pers and maintain a self employed status.
"It's a good thing for the industry period," said Roy Enoksen, owner of several scallopers, including the Nordic Pride, one of four test cases in the legal dispute. "It effect us all.
Mr. Enoksen said under the IRS dispute he had faced liabilities running into the "hundreds of thosuands of dollars like most of the other people."
"We're all happy that it appear sto be finally behind us," said Rosemary Davidsen, who with her husband Hans, owns the Edgartown, another New Bedford scalloper which has been one of the test case vessels.
"We're pleased and excited that it's finally over,' she said. "We can now go forward and make plans for the future."
Kathy Downey, who has chaired a local legal defense effort know as The Last Chance Fund, said the industry appeal to the IRS' past position will remain active in the U.S. Court of Appeals for the time being.
Senator Kerry also arranged to have members of his staff meet with members of the fishing industry today to discuss the reauthorization of the Magnuson Fisheries Conservation and Management Act and the current regime of fisheries management.
Several of those in the fishing industry complained that new, stricter fisheries conservation measures have been imposed by the New England Fishery Management Council and the national marine Fisheries Service without proper science to back it up.
"They say they have a feeling,' said Harriet Didriksen, a Mattapoisett vessel owner who has been critical of government fisheries stock assessments. "We can't ruin complete fishing communities on just a feeling."
James M. Kendall, executive director of the New Bedford Seafood Coalition, said the government implemented severe fishing cutbacks under the so called Amendment 7 groundfish plan, even though catch data supports the arguments that stocks are recovering.
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