Feds End Prisoners' Bogus Tax Refunds

A new agreement has finally been reached aiming to stop federal inmates from claiming millions of dollars in bogus tax refunds.

From the Associated Press:

Pressure from U.S. senators in New York, Ohio, Minnesota and Florida in January led to an agreement signed Wednesday between the Internal Revenue Service and the federal Bureau of Prisons to break down bureaucratic and regulatory barriers to end the practice. The memorandum of understanding struck between the two agencies overcomes legal obstacles that hindered their own efforts and paves the way for states to make similar agreements that apply to their prisons.

"The impasse needed to end, and today it's over," Sen. Charles Schumer of New York said Wednesday, adding that the agencies responded quickly. "This agreement means that prisoners will no longer be able to bilk taxpayers out of millions of dollars."

Sen. Amy Klobuchar of Minnesota said the agreement effectively cuts through unnecessary red tape to "stop felons from scamming the system."

"It's shocking that inmates are ripping off the taxpayers right under the government's nose," said Sen. Bill Nelson of Florida.

Sen. Sherrod Brown of Ohio said the case shows "government agencies need to work together to prevent tax fraud wherever it occurs, but especially when we're being bilked from behind bars."

The senators pushed the agencies to cooperate after a federal audit showed the practice continued, despite a 2008 law aimed at stopping it.

Read more here...

Rise In Jobless Claims Boosts Fed Easing Expectations

From MSNMoney.com:

New U.S. claims for jobless benefits rose last week, hardening the view the central bank will pump more money into the economy, and keeping pressure on Democrats poised to lose congressional seats in November 2 polls.

At the same time, record-high imports from China helped push the U.S. trade deficit wider in August, while rising food and energy prices pushed inflation at the wholesale level up twice as fast as expected last month.

Initial claims for state unemployment benefits rose to a higher-than-expected 462,000 in the latest week, the Labor Department said on Thursday.

Economists polled by Reuters had expected initial claims at 445,000 in the latest week.

"These numbers don't fall out of the range of expectations, so they don't move the needle too much," said Jason Pride, director of investment strategy at Glenmede Investment and Wealth Management in Philadelphia.

Read the full article on MSNMoney.com here.

Feds Bust Billion-Dollar Mortgage Fraud Ring

Federal agents have arrested former mortgage-lending executive Lee Farkas for his involvement in a billion dollar fraud ring. As the former chief of Taylor Bean & Whitaker, a wholesale mortgage lender, Farkas "operated a sophisticated shell game" to prop up his struggling company and take advantage of investors and taxpayers.

According to CNN.com, Farkas could spend life in jail if found guilty. Officials claim he “ripped off the Federal Housing Administration and investors in at least two financial firms, and tried to make off with funds from the Troubled Asset Relief Program”

"The gravity of this fraud is really quite amazing," said Assistant Attorney General Lanny A. Breuer. He said losses from the scheme will be measured "in the billions."

Among other things, authorities said, Farkas filed false information to get TARP loans via an investment in TBW's biggest lender, Colonial Bank of Alabama. Colonial failed last August in the third-biggest bank failure of the year.

Taylor Bean also was a huge lender under Federal Housing Administration programs. Officials said the FHA and Ginnie Mae, another government mortgage lender, lost some $3 billion in the Taylor Bean fraud. It is the FHA program's biggest-ever loss, they said.

Continue reading at CNN.com…

The Unemployed Held Hostage

From NYTimes.com:

Since June 1, when federal unemployment benefits began to expire, an estimated 325,000 jobless workers have been cut off. That number will swell to 1.25 million by the end of the month unless Congress extends the benefits. The Senate, so far, has failed to act.

Some senators, including Democrats, have balked at an unrelated provision that would begin to close a tax loophole enjoyed by some of the richest Americans. You heard right. Desperately needed unemployment benefits have been held hostage to a tax break for the rich, and the Senate’s Democratic leadership has had to delay and finagle to get its own caucus in line.

State-provided unemployment benefits generally last for 26 weeks, and the federal government picks up the tab after that, provided Congress approves the extensions. There is no disagreement over the need: 46 percent of the nation’s 15 million jobless workers have been unemployed for more than six months — a higher level than at any time since the government began keeping track in 1948.

There is not even any genuine debate about how to pay for extended benefits. An extension through November would cost about $40 billion. But unemployment benefits are correctly considered emergency spending — they are a vital safety net, and the money is crucial to supporting consumer demand in a weak economy — and exempt from pay-as-you-go budget rules.

Nonemergency provisions in the bill do need to be paid for, including renewal of several generally useful business tax breaks, like the research-and-development tax credit, totaling $32 billion over 10 years. To help cover those costs, Democratic lawmakers in the House and Senate started out with the sound idea to close an egregious tax loophole that allows wealthy fund managers at private equity firms and other investment partnerships to pay a top tax rate of just 15 percent on much of their earnings — versus a top rate of 35 percent for all other higher-income Americans.

Medicaid Cut Places States in Budget Bind

At least 30 states are hoping Congress will pass a six-month extension on Medicaid because most were already counting on the federal money. The New York Times reported the Medicaid provision, which would extend assistance first granted in last year’s stimulus package, was considered such a sure bet by many governors and legislative leaders that they prematurely included the money in their budgeting. But under pressure from conservative Democrats to rein in deficit spending, House leaders in late May eliminated $24 billion in aid to states from the tax and jobs bill that I have been mentioning in my recent blog posts. See http://bit.ly/9ZFptV.

The good news is that the Senate plans to take up the measure this week, and the majority leader, Senator Harry Reid of Nevada, favors restoring the money. Nancy Pelosi, the House speaker, is also looking into reconsidering the appropriation of funds.

Read the full article from the New York Times here.

Obama extends benefits of gay federal workers

In a move that goes beyond the memo President Obama signed last June which permitted same-sex partners to use the government’s long term care insurance and other fringe benefits, he extended the range of benefits to same-sex partners of eligible federal workers to include access to medical treatment, relocation assistance, credit unions, and fitness centers. These benefits do not cover uniformed members of the military, however, but the House is working on a repeal of the “Don’t Ask Don’t Tell” law, so there is a chance they will cover same-sex couples of military personnel next year.

This extension of benefits comes in perfect alignment each year with June now being the Lesbian, Gay, Bisexual, and Transgendered Pride Month declared by Obama. Obama also ordered federal agencies last year to identify other benefits that could be offered to same-sex partners. Unfortunately, he is prevented by federal law from providing full federal benefits to same sex-partners. Read the full article here.

Fed Cut Tax Evaders Utilities

According to the Associated Press, the federal government has cut the utilities on convicted tax evaders Ed and Elaine Brown. The couple insists that federal income tax laws are invalid and were sentenced to 5 1/2 years in prison in April 2007. Authorities surrounded their property last week and cut their phone, power and Internet service in an effort to get the couple to report to prison. U.S. Marshal Steve Monier acknowledged that waiting out the couple could take months, but that time was on authorities' side. He said he hoped prison would seem like an agreeable option for the Browns after a summer without air conditioning and possibly a winter without heat.

$2.2 Billion in 2003 Tax Refunds

According to IRS estimates there is over $2.2 billion in unclaimed tax refunds from over 1.8 million American taxpayers who did not file a federal return in 2003. The IRS estimates that half of the people who could claim refunds would receive over $600 per return. There is no penalty for filing a late return qualifying for a refund, and the IRS is encouraging people to file before the April 17, 2007 deadline, at which point all unclaimed funds become property of the government. You can get all current and prior years tax forms at www.IRS.gov or by calling 1-800-TAX-FORM. For more information check out Times Record News.

College Tuition Tax Deduction Extended

"The federally run College Tuition Tax Deduction program, which a month ago teetered precariously close to termination, was renewed last weekend, extending its life for another two years." For more information click here.