There's something missing in that whole Shaw/Schumacher arrangement.

If you've been watching the rough and tumble action in Rapid City's mayoral race as it has played out on this website, in the Rapid City Weekly, the Rapid City Journal, and on Mt. Blogmore, I don't need to bore you with an extended explanation.

The short synopsis is that there were initial discussions and planning between Schumacher and Kooiker for a race against Jim Shaw as early as last summer, with Schumacher reserving a mayoral related internet address on Sam's behalf. Recently, Rapid City businessman Doug Hamilton dangled a big wad of cash (reportedly $35k) for Schumacher to jump horses mid-stride over to the Shaw campaign, and telling people that he's not "a Judas" - he's just doing it to secure his daughter's future.

And, of course Mayor Shaw is trying to keep himself out of all of this political back and forth.

But there's a few more twists and turns to all of this.

Go back to last year, and if you start poking around the Rapid City contests, one thing you'll find is that this isn't the first time Hamilton and Schumacher have worked together for a candidate's benefit. Because they may have had a similar arrangement to benefit the Fuller campaign.

Under the auspices of Hamilton's political action committee - the Elect Better Government PAC - Councilman Mike Schumacher was paid around $7700 for his consulting services.


Of course, you can read the full report for yourself here at the Secretary of State's website.

Now whether it was directly for Judge Fuller or for the PAC remains up in the air, as there's no corresponding in-kind report on Judge Fuller's campaign finance report. However, Schumacher claims he ran the Fuller campaign in the Rapid City Weekly article. Many of the details are inconsequential, but it's undisputed and in black and white on the Better Government PAC report that Mike was paid $7700 for his consulting services in the last campaign cycle. And that's that.

Except, having done some of this consulting type stuff myself over the years, there's a few things I've noticed. First, few candidates want to pay for consulting. So if you find one who will, that's a good thing.

Second, in South Dakota, there's a couple of laws that budding political consultants should be aware of:
10-45-4. Tax on receipts from business services. There is hereby imposed a tax at the same rate as that imposed upon sales of tangible personal property in this state upon the gross receipts of any person from the engaging or continuing in the practice of any business in which a service is rendered. Any service as defined by § 10-45-4.1 shall be taxable, unless the service is specifically exempt from the provisions of this chapter.

and...

10-45-4.1. Services subject to taxation. "Service" means all activities engaged in for other persons for a fee, retainer, commission, or other monetary charge, which activities involve predominantly the performance of a service as distinguished from selling property. In determining what is a service, the intended use, principal objective or ultimate objective of the contracting parties shall not be controlling. For the purposes of this chapter services rendered by an employee for his employer are not taxable.
Why does this enter into the conversation? Well, I've done a little checking into the matter as I've noticed it in the last couple of weeks. And, according to a check with the South Dakota Department of Revenue and Regulation, while Rapid City Councilman Mike Schumacher is being paid for his consulting services he doesn't appear to hold a South Dakota Sales Tax License.

Yes, even political consultants are requires to pay the tax man. Certain things are exempt, such as advertising, but you have to report amounts anyway. Although, I'm stuck paying it on the t-shirts I do, as I've reported on my own sales tax forms. Luckily, I don't make enough to have to report it more often than twice a year.

But in this instance you have Councilman Schumacher, an elected city official whose city-based constituency is a direct beneficiary of the sales taxes he would pay. That is, if he had a sales tax license. And paid the taxes those annoying laws say he's supposed to.

Neglecting to get his license (as it appears), it looks like he shorted the city and the state a combined $462, based on the $7700 consultant fee he collected from the political action committee, the Elect Better Government PAC. If the rumors of his professional fee being $35,000 for the Shaw race bear out, supposedly he's going to owe a combined $2100 more in city and state sales taxes.

So, what's missing in that whole Shaw/Schumacher arrangement? At this point, it looks like a sales tax license. And anyone saying that the arrangement is a good thing.

Comments

Anonymous said…
And this amounts to..

PP likes Kooiker, and hates Shaw. And, if you screw with Kooiker, you screw with PP. So, he digs until you're guilty of tax fraud.

DIIIRRRTY.
Anonymous said…
PP - Maybe you are overlooking the possibility that Schumacher was paid to run Kooiker's campaign last year. Is that anywhere on Kooiker's report?
PP said…
Why would I hate Shaw? I've written about him and a few of his less-than-mayoral antics, but I also had a positive experience with him, and thought he did a good job when we worked on a mutual project.

I don't hate Mike either, but dang, he's not looking good in most people's eyes with what he did to his best friend Sam.

Otherwise, if you sell a service, the law is pretty clear that you have to charge sales tax on it.

Believe me, I'd rather not. Those forms are a pain in the rear-end. But I don't get to make the rules. And the rules say if you're selling a service (i.e. consulting) you have to pay sales tax and have a license.

And if Mike isn't doing either, it's not my bust. It's his.
PP said…
9:47 -

It's entirely possible, but I haven't researched whether those city forms are on-line.

Even if Sam paid Mike to consult, it's not a black mark on Sam, as the responsibility to charge the tax falls on the businessman, not the client.
Anonymous said…
Gawd, I am so sick of this. Everything that can be said has been said. Big deal! Business is business and politics is politics! GET OVER IT AND QUIT BEATING A DEAD HORSE!!
Anonymous said…
PP- maybe I'm trying to read something into this, but the money was listed in the "contribtion to a canidate or committee" section of the report. There is a different section for consulting services.


The way I read the report, it this it was a donation to Schumacher for $7,700 in a year that he didn't have an election.

If indeed the money was for consulting, then Hamilton needs to file an amended report.

If not, then Schumacher sure looks like he sold his vote to a big developer in town.

Either way, this smells.
PP said…
10:30, you make a good point on that, and the city campaign finance reports would tell the tale better than anything.

I'll try to send someone looking for them.

However, in the meantime, I would refer back to the RC Weekly article where Schumacher talks about running Fuller's campaign.

If the financial arrangement was such that the PAC made a donation to Schumacher's campaign committee for his services, I think it's pretty iffy that he could escape sales tax doing it that way.

In fact, I think the State DRR would almost unequivocally say that if that's the case, the campaign committee would then need a sales tax license.

Like it or not, "the man" is still going to want a cut if a professional service is being rendered and paid for.
Stan B said…
Anon 9:47

A well written article by Bob Mercer last year that ran statewide points out the old news that Kooiker;s campaign received 2k from Hamilton's pac in 2005, and his opponent, Tom Hennies, received more than 13k from Adelstein in the same city council race.

It's well known that Hamilton and Adelstein don't like each other.
Anonymous said…
10:22:

That's what this blog is about. Cut an article out of the MSM, post it, chum it, then see what hits.

This dead horse is hamburger, and will soon be puree.
pdq said…
11:54 - Mike, you must not like the fact that people are noticing your naughty behavior.

And if you didn't notice, The MSM hasn't written on your not having a sales tax license.... yet.
PP said…
11:54, you must not read blogs.

At all.

The writing style on most all political blogs is a combination of original reporting as well as editorial comment on the stories of the day.

In case you missed it, the post was all original. But yes, the one right above it has a snippet, but then at least twice as much original material.

The same with SDP, CCK, Sibby, SDW, Mt. Blogmore, Argus Voices, etcetera and so on.

If you still don't get it, you'd better go back to USA today.

Trust me, you'll be more comfortable there.
chase said…
If you ever hear Schumacher say about a candidate "he's just not ready (for that office) yet." You know he's working for the opponent.

Sam's my man!
Anonymous said…
PP- this could be the bullet.
Anonymous said…
PP... You are my hero. I am glad someone finally found something solid to prove that Mike is a snake in the grass. I hope the SD GOP keeps him far away from any of their races.
Anonymous said…
This does smack of corruption, regardless of the degree or level. It may be time to give an unknown a shot at sitting on the council in RC. At least this person would have to run on some solid issues.
Anonymous said…
A person is judged by their actions in life. Here we have an individual who worked as the executive director of the republican party barely thru the end of one election cycle. Took money from a from a PAC to work for a democrat. He didn't pay sales tax and the contributions were not reported according to law. The PAC lists a $1,000 directly to the democrat's campaign. There is no mention of the more than $7,000 in kind contribution listed on the "Judge's" report. Then he attempts to take $35,000 to "run" the campaign of a political adversary and against his best friend. The $35,000 is to be paid the same way he took money to assist the democrat.

It appears both tax and election laws were broken! It also appears that basic morals and ethics have been violated.

How will Mike be judged? He'll probably need a judge as unscrupulous as himself to make these calls. I guess he better call the judge who has proven once again he cannot follow election law.
Anonymous said…
Fat, dumb, lazy and treacherous!
Anonymous said…
The Code of Judicial Conduct is to govern the election of Judges. In regard to campaign finance, only those specific portions of the South Dakota Campaign Finance Law mentioned in the Code of Judicial Conduct applies to the Judicial candidates.

The Code of Judicial Conduct does not provide for Political Action Committee contributions. However, Canon 5(C)(2) states that judicial candidates and their commitees "may solicit and accept reasonable campaign contributions not to exceed one-thousand dollars ($1000.00) in the election year per individual or organization." Nothing in the Code of Judicial Conduct allows for any contributions in excess of $1000.00.

Fuller's report lists the maximum campaign contribution of $1000.00 from Hamilton's PAC, but lists no in kind contribution. Is this an admission that Fuller could only take $1000.00 from Hamilton's PAC? Did Fuller try to hide the fact he had a $7,700 in kind contribution from Hamilton's PAC?

Fuller's report lists that he directly gave $2,000 to Schumacher. So, Schumacher got $9,700 for his work as Fuller's campaign manager. Certainly, there was coordination, but they couldn't make the reports match? Or could it have been that they didn't want the reports to match?

This story is certainly becoming interesting!
Anonymous said…
Shaw should be scrambling to distance himself from Schumacher. This is becoming sticky for Schumacher, Fuller and Shaw. Schumacher has created Kookier's greatest issue.
Anonymous said…
Schumacher is political road-kill. Benedict Schumacher. His constituents can't even trust him.

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