Obama Calls for $250 Payments to Seniors

President Barack Obama is asking congress to pass a new plan to give senior citizens $250 payments next year to compensate for not receiving any increase in their social security payments. For the first time since 1975, there will be no increase to the amount recipients of social security checks receive since it is pegged to the inflation rate, which was negative this year.

"Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession," Obama said in a statement. "This additional assistance will be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis."

Obama's proposal is similar to several bills in Congress. The $250 payments would also go to those receiving veterans benefits, disability benefits, railroad retirees and retired public employees who don't receive Social Security. Recipients would be limited to one payment, even if they qualified for more.

The White House put the cost at $13 billion. Obama said he would not allow the payments to come out of the Social Security trust funds, further eroding the finances of the retirement program. Social Security already is projected to pay out more in benefits than it collects in taxes in each of the next two years.

Continue reading at APnew.MyWay.com…

U.S. Will Set Guidelines to Modify Real-Estate Loans

From Bloomberg.com:

U.S. bank regulators, saying losses on souring commercial real-estate loans pose the biggest risk to lenders, will issue guidelines to help the institutions modify the agreements.

Reduced demand for space has led to falling rental rates, adding to losses on the loans, leaders of the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Office of Thrift Supervision told the Senate subcommittee on financial institutions today.

“The most prominent area of risk for rising credit losses at FDIC-insured institutions during the next several quarters is in CRE lending,” FDIC Chairman Sheila Bair said, referring to commercial real estate. “Prudent loan workouts are often in the best interest of financial institutions and borrowers.”

Large concentrations of commercial property loans are behind many of the 123 banks that failed in the past two years, draining the FDIC’s deposit insurance fund. Commercial real- estate loans totaled almost $1.1 trillion as of June, representing 14 percent of all loans and leases, Bair said.

Federal bank regulators will soon issue guidelines on commercial real-estate loan workouts, Bair said without providing specifics.

“The guidance we are working on is intended to promote supervisory consistency, enhance the transparency of CRE workout transactions, and ensure that regulatory policies and actions do not inadvertently curtail the availability of credit to sound borrowers,” said Timothy Ward, the OTS’s deputy director of examinations, supervision and consumer protection.

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California Laws Get Tough on Mortgage Finance

California Governor Arnold Schwarzenegger signed seven new mortgage finance bills in to law on Monday, most of which crack down on fraud and set new requirements and restrictions for mortgage and reverse mortgage originators. Yesterday Housingwire.com posted an in depth article describing each bill and their intended purposes. Check out their list below.

Senate Bill (SB) 36 regulates the licensing requirements for residential loan originators in compliance with the federal Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act.

SB 237 requires appraisal management companies (AMCs) and appraisers register with the Office of Real Estate Appraisers and subjects appraisers to the provisions of the Real Estate Appraisers’ Licensing and Certification Law.

SB 239 raises the crime of mortgage fraud from a misdemeanor to a felony and makes it easier for prosecutors to obtain fraudulent loan documents to investigate cases.

Assembly Bill (AB) 260 places restrictions on subprime loans and prohibits originators from “steering” borrowers, or encouraging borrowers to buy riskier loan products when they are eligible for affordable products. It also gives state regulatory agencies the authority to suspend or revoke the licenses of real estate lenders and mortgage brokers that violate the state’s lending laws.

AB 329 sets guidelines for reverse mortgages originated for elderly borrowers — those over 65 years old — requiring specific disclosures and offering counseling service referrals. Originators are also prohibited from selling other financial products to a reverse mortgage borrower.

AB 957 gives the buyers of foreclosed property the right to choose local escrow officers to complete transactions. It prohibits the seller of a residential property from requiring the buyer to use an escrow service company or purchase title insurance chosen by the seller.

AB 1160 requires originators to provide borrowers with a mortgage summary document translated in the language the contract was verbally negotiated.

Does Fido Deserve a Tax Break?

From BloggingStocks.com:

There is a bill making rounds on Capitol Hill that would provide a tax break for up to $3,500 for pet expenses. Does Fido really deserve a tax deduction? Do we really need to subsidize pet ownership in this country?

The recession has been extra hard on pets as people have abandoned pets at shelters they are no longer able to properly care for them. Pet can be very expensive between food, visits to the vet and increased rent. Those of you who think dog food is expensive should try to feed a horse sometime!

While pet lovers may point to all the positive aspects a man's best friend can bring to a family; if there are tax benefits people may start to get a pet just for the tax benefits. This brings up a lot of interest scenarios. I wonder if the benefit will be per pet or per pound? Would you get the same benefit for a pet mouse as you would for a pet horse? If someone adopts 76 cats do they get to pick up $266,000 in tax breaks? And what happens when you feed the pet mice to the pet snake?

If the bill were to pass it would certainly be good for companies in the Pet Care Industry like PetSmart (NASDAQ: PETM), Petmeds Express (NASDAQ: PETS), and Tractor Supply (NASDAQ: TSCO).

Some Congressman may have written this bill just to please some a pet loving constituent knowing it is unlikely to pass. I thought there were some real issues like a recession, unemployment and $1.4 trillion deficit that lawmakers could keep busy with.

While everyone loves Fido and Fluffy, should they really get a tax break?

Halloween and Taxes: Top IRS Horror Stories

Yesterday the RDTC Tax Help Blog posted a new blog entry celebrating the Halloween season with some chilling tales of IRS horror stories. For most of us, ghosts and witches are only really scary in horror movies. In real life, one of the scariest things that can happen to an adult is to find a letter form the IRS in the mail. Check out the following three examples, or check out Halloween and Taxes: Top IRS Horror Stories on the RDTC Tax Help Blog for the full article.

1. A Cayman Islands Vacation Gone Bad

When most people hear the words “Cayman Islands” they probably think of a relaxing Caribbean vacation. However, many might also think about illegal tax shelters, as the islands are somewhat infamous for hosting the private bank accounts of many American tax evaders. A few years ago, Joe ran into a few problems of his own in the Cayman Islands. He and his business partners used to vacation in, and bank in the islands on a regular basis, until Joe’s vengeful ex wife got wind of the situation. She tipped off the IRS and Joe found out about it one afternoon when 25 federal agents stormed his home and business, ceasing all kinds of financial information. Joe was considered a flight risk and imprisoned under $5 million bail. It took dozens of court cases, and thousands of dollars in legal fees to prove his innocence, and resulted in a major lifestyle change for Joe.

2. The Audit of Endless Receipts

Auditors are notorious for being difficult every now and then when it comes to documenting expenses and qualifying for credits, but usually leave a little leeway. However, this was not the case for a taxpayer named Heather who was audited by what she now refers to as the world’s most relentless auditor. She claims that the auditor in question hounded her for not only proof of her business expenses, but receipts for every single personal and professional transaction made over the past two years. The auditor supposedly made her scrounge up receipts for transactions for as little as a dollar or two. Needless to say, Heather could not find every document required and faced several penalties.

3. They Came with Guns

Restaurant owner John Colaprete woke up one March morning in 1994, unsuspecting of the terror that would soon be at his doorstep. That afternoon, gun-wielding federal agents stormed his home, his restaurant managers home, and his two restaurants with no explanation and no apologies. John, a former marine, was in total shock and had no idea what could cause such a raid. It turns out one of Johns former bookkeepers, who had been fired for embezzling from her employers, had gone to the IRS with a horror story of her own. However, she fabricated her story in order to cover her own mistakes and told the IRS that John was involved in both money laundering and gun trafficking.

Once the IRS realized he was innocent, John became a champion for scorned taxpayers everywhere. He spoke to a roomful of U.S. senators about his experience, and explained that his restaurants were left in shambles and that his reputation was ruined by the false scandal. These days John gets calls every day from taxpayers sharing their own IRS horror stories.

Ivanka Trump's Business Advice for Women

Ivanka Trump, daughter of famed entrepreneur Donald Trump, was on Good Morning America today and offered useful business advice to women across the country. ABCnews.com did a write up of her advice and posted the video of her interview on their site. Check out a few of her tips below, or head over to ABCnews.com to watch the informative video.

Trump, 27, the author of "The Trump Card: Playing to Win in Work and Life," sat down with ABC News' Cynthia McFadden and a roundtable of four businesswomen spanning three decades of experience.

The participants were Larisa Terkeltaub, a 26-year-old first-year business student at New York University's Stern School of Business; Joanna Billings, 25, a structural engineer; Gai Spann, a 41-year-old travel agency owner; and Tracey Andrews, a natural specialty foods saleswoman in her 30s.

From how to make it as an assertive woman in business to how to gain financial backing in a tough economic climate to how to get the message out, the women talked candidly about what has changed since their parents' generation and how all can have their own "trump card," even if their father isn't Donald Trump.

The first topic up for discussion was business experience. Terkeltaub asked Trump what experience is necessary to become a successful entrepreneur.

While Trump first acknowledged that experience is obviously still very important, and "you can't fake it," she then explained that the best thing the inexperienced can do to help themselves is to ask intelligent questions of those around them.

Even though Trump concedes "there's a fear that it exposes that inexperience," in reality asking advice and learning from coworkers prevents young people from making more serious mistakes.

Top Foreclosure Alternatives

Every day it seems like I hear a new report about the economy. Some claim the recession is easing, with real estate values leveling and home sales actually increasing in some areas. However, for every good report I see, there are just as many asserting the opposite. Personal bankruptcies are at the highest level they have been at in years, and unemployment rates continue to climb.

Whether or not the economy is improving, one fact remains the same: families all over the country are struggling to make their mortgage payments. Depending on your unique financial situation (the value of your home, changes to your income, missed payments etc.) foreclosure may not be your only option. The Federal government has gone to great lengths to help homeowners across the country stay in their homes, and as you can see from the article below, there are a handful of different approaches you can take to avoid foreclosure. Some, you can do yourself, while others you might want to hire a professional to handle.

Pay Delinquency

If your financial situation changed quickly, and you missed a payment or two before landing back on your feet, then do not worry. Lenders are legally required to reinstate your loan if you pay off the delinquent amount. If you can borrow the money from a friend or family member then you can easily avoid foreclosure. You could even take out a small personal loan to pay off the delinquent amount. In addition, your retirement plan may allow you to take an early withdrawal in order to avoid foreclosure. Be sure to speak with your bank or financial planner to find out which method would be best for you.

Refinance

If you are current on your loan (meaning you have not missed any payments) then you may be able to refinance your loan before going into delinquency. Depending on your current interest rate, and the amount you owe on your loan versus your home’s value, you could greatly reduce your monthly payments.

HUD Partial Claim

If your loan is FHA insured then it may be possible for your lender to receive a one-time payment from the FHA Insurance Funds to cover your loan’s delinquency. However, before you get excited remember that in these tough economic times thousands of homeowners are requesting this type of assistance.

Payment Plans

If you recently lost your job, or had a reduction in pay, and missed a few mortgage payments then you may be able to negotiate a repayment plan with your lender. This is where you make your usual mortgage payment, plus an amount of the total delinquency amount. Repayment plan terms can be as short as a month or two, and as along as a year, and at the end of the term you would have paid off your total delinquency. Afterwards, your mortgage payments will go back down to the original amount. Depending on your lender, you may have to submit a full financial disclosure, and possibly even a good faith payment upfront to begin the plan.

Loan Modification

A loan modification will allow you to negotiate more favorable terms to your current loan, without having to begin foreclosure proceedings. You may be able to negotiate a reduction to your interest rate, or even a direct reduction on the principal amount of your loan. Although you can attempt to negotiate directly with your loan company, it might be in your best interest to hire a professional if you are serious about modifying your loan. Lawyers and loan modification companies have experience dealing with lenders and can often reach a better settlement than you could have on your own.

Local Assistance Programs

Depending on what city or state your property is located in, you may be able to take advantage of a local assistance program. For example, the state of Pennsylvania offers a program known as Homeowners’ Emergency Mortgage Assistance where families facing foreclosure can receive emergency funds to help keep their homes. Before beginning foreclosure proceedings, be sure to do research about local assistance programs to see if there are any that you might be able to take advantage of.

Pre-Foreclosure Sale

If you lost your job or are experiencing a long-term reduction in your income, then you may need to work with your lender to set up a pre-foreclosure sale. This means selling your home at a reduced price in order to avoid being forced into foreclosure. Although this option can be somewhat damaging to your credit, it can get you out of your loan so that you and your family can begin to settle your financial troubles.

Deed-in-Lieu of Foreclosure

A last resort to avoid foreclosure is known as a dead-in-lieu of foreclosure. In this situation, you are basically giving your house back to the lender. Although this may sound like a terrible idea to some, it is actually quite a bit less harmful to your credit score than a foreclosure.

Planning Early for Tax Season

Yesterday, my team shot another video for our tax tips video series. In this episode, host Edward Lester discusses how to plan early for next tax season. Although April 15th is still a few months away, it is never too early to start preparing. You can watch the embedded video below and be sure to head over to my YouTube channel to subscribe to my videos.

Obama Drops Plan for Corporate Tax Increase

While still looking for a way to fund health care reform, the Obama administration has dropped a plan to raise over $200 billion by changing a series of tax laws affect multinational corporations. According to the Wall Street Journal, the main reason the White House was hoping to make the change was because of their need to find new sources of federal revenue to fund their increased spending.

Jason Furman, a White House economic adviser, made that point clear at the end of a session with a dozen or so lobbyists in March. Catherine Schultz, head of tax policy at the National Foreign Trade Council, who was at the meeting, says Mr. Furman basically told the group: "We need the money."

From early on, there were reservations about the proposal among key lawmakers, and the White House indicated it was open to alternatives. Prominent members of the House Ways and Means Committee from both parties worried the provision would erode the competitiveness of U.S. companies abroad.

The tax dispute is rooted in an unusual provision in the U.S. tax code. Nearly all industrialized countries tax domestic companies only for revenues earned at home. The U.S. taxes companies on world-wide profits. But current U.S. law allows American multinationals to defer paying taxes on revenues earned abroad until companies repatriate them, usually in the form of cash dividends to the parent company.

Critics long have complained that the provision encourages companies to avoid U.S. taxes by expanding production on foreign soil. On the campaign trail last year, President Barack Obama promised repeatedly to "end tax breaks for companies that ship jobs overseas."

Deadline Looms for Americans to Disclose Accounts in Foreign Tax Havens

From LATimes.com:

Wealthy U.S. taxpayers, concerned about an Internal Revenue Service crackdown on the use of secret overseas bank accounts as tax havens, are rushing to meet a Thursday deadline to disclose those accounts or face possible criminal prosecution.

The concern was triggered this summer when Switzerland's largest bank, caught up in an international tax evasion dispute, said it would disclose the names of more than 4,000 of its U.S. account holders.

The decision shattered a long-held belief that Swiss banks would guard the identities of its American customers as carefully as they did their money, and it raised concern that other international tax havens might be next.

Under an amnesty program, the IRS is allowing taxpayers to avoid prosecution for having failed to report their overseas accounts. As a result, tax attorneys across the nation have been besieged by wealthy clients who are lining up to apply even though they will still face big financial penalties.

Tax lawyers in Southern California say they've encountered an array of clients concerned about international bank accounts: Hollywood producers, immigrants who left behind foreign accounts and business owners who have stashed money overseas to avoid taxation.

"It's crazy busy," said Pasadena tax attorney Phil Hodgen, who for a brief period in September stopped accepting new clients because he was overwhelmed with amnesty requests. "These people are calling, saying, 'I can't sleep at night.' "

Some 3,000 U.S. residents have voluntarily disclosed their foreign bank accounts to the IRS this year, compared to fewer than 100 in 2008, said one U.S. government official who asked not to be identified.

New IRS Retirement Plan Navigator Aims to Help Small Businesses

According to their newest press release, the IRS has created a new Web-based tool to help small business owners determine which tax-favored pension plan best suits their needs and how to keep their plans in compliance.

The IRS Retirement Plan Navigator is intended to provide employers with an easy-to-use guide that focuses on three areas: choosing a plan, maintaining a plan and correcting a plan.

By using the navigator, employers may find that choosing and maintaining a pension plan is not as daunting as they thought. Some plan types are less costly and easier to establish than others.

The navigator does not suggest which plan may be best for a specific employer but it does lay out the options to allow them to choose one that best fits their situations. The navigator includes a side-by-side comparison of pension plans and their requirements.

The navigator provides a checklist and suggested resources for maintaining compliance. Pension laws change frequently. Employers can minimize problems by doing a once-a-year review to ensure they maintain compliance.

The IRS also recognizes that mistakes can be made unintentionally, and many errors can be corrected without notifying the agency. The navigator offers suggested options to employers seeking to correct errors and bring their plans back into compliance.

Although the Retirement Plan Navigator is aimed at small business owners, it also can help mid-size businesses review their options as well. Individuals who want to better understand their employer’s plan may also find it of use.

The Web-based guide will be kept up to date as pension laws and regulations change.

Questions for the Tax Lady: October 12th, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: I owed the IRS thousands, and I want to hire an attorney but I am afraid I will not have enough money to afford the retainer fee. How much does it usually cost to hire an attorney?

Answer: The amount you will pay is going to depend on the attorney you hire. Typically an attorney, or law firm, with a lot of experience helping taxpayers settle their debts will cost a little more then an inexperienced lawyer or enrollment agent. Additionally, the amount of time it takes the attorney to work on your case will also influence fees.

Question #2: Is it true that I can use my federal tax credit to help pay for closing costs on my new house?

Answer: Yes. If you do not want to have to wait until April to collect your Federal tax credit, then you can elect to use it to pay for your closing fees or even part of your down payment. However, it can be a tricky process, and not all loan companies can handle it. If you do want to use your credit upfront then be sure to speak with your loan agent as soon as possible. For more information on the topic, check out the following article from Lending Tree.com.

How to use tax credit at closing

To use the tax credit at closing, home buyers must obtain a loan that's insured by the Federal Housing Administration (FHA). To obtain an FHA-insured loan, be sure to apply through an FHA-approved lender. Keep in mind that not all lenders can accommodate using the tax credit at closing. If you're interested in applying the tax credit to your closing costs, ask your lenders in advance. You may also want to consider working with a state housing finance agency that enables the tax credit to be applied towards closing.

The credit can't be used toward the first 3.5 percent of the down payment on an FHA loan. That means borrowers who want to use the tax credit as a down payment must still bring at least that amount to the transaction in addition to the tax credit. The 3.5 percent down payment must come from the buyer's own funds or a gift, subject to FHA rules. However, if the borrower obtains a loan through a state housing finance agency, the minimum down payment requirement to use the tax credit at closing may be waived.

Cage Owes $6,617,550.84 in Tax Debts

Earlier in the year I put together list of the 5 biggest celebrity tax evaders of 2009, and although Nicolas Cage was already at the top of my list, recent reports have emerged claiming that he owes more then everyone had originally thought. According to TMZ, in addition to the $6,257,005 he owed in unpaid taxes from 2007, he also owed for the following tax years.

2002 -- $70,190.05

2003 -- $179,738.23

2004 -- $110,617.56

That brings his total tax debt to an astounding $6,617,550.84. Associated Content also claims that Cage owes another $2 million to the East West Bank. With all the money he makes form his films, many are wondering how Cage could get into such a financial mess. Well, blame the real estate industry. He reportedly owns dozens of properties across the United States and Europe, including an 11th century German castle called Schloss Neidstein that he recently sold. However, with real estate values down all across the world Cage is reportedly having difficulty selling his properties to repay his debts.

The Tax Implications of Obama’s Nobel Peace Prize

After it was revealed last week that U.S. President Barack Obama had won the Nobel Peace prize, Obama was quick to announce that he would be donating the $1.4 million cash prize to charities. This has led many experts to wonder, what tax implications will his prize have on Obama’s next income tax return?

Pat Regnier, of CNN Money, explains that Obama should not have to worry about any tax problems as long as the money goes directly to a charity. Additionally, he might even be ok if he does not have a charity selected when he receives the award since you can deduct charitable contributions up to 50% of AGI, and many suspect that the income he earns from his book this year will not outweigh the prize money.

However, Leonard E. Burman of the Tax Prof Blog brings up another interesting point. Check out her analysis of Obama’s taxes below.

Ellen Aprill's analysis of President Obama's Nobel Prize is fascinating, but left out an important factor in favor of using § 74(b) to avoid the recognition of income. If the president claims the prize as income and then makes a charitable contribution, he'll pay more tax because of the § 68 limitation on itemized deductions. The $1.4 million increase in income will reduce President Obama's itemized deductions by $42,000 (3% of $1.4 million), raising his taxes by $14,700. The problem arises because income is effectively taxed at a higher rate than deductions for people subject to the deduction phase-out.

Other phase-outs cause the same problem. AMT taxpayers in the § 55 phase-out range for the AMT exemption, for example, can face a big tax hit if they include an honorarium or award in income and then make an equal gift to charity. Every dollar transferred reduces the AMT exemption by 25 cents, costing 6.5 or 7 cents in tax depending on whether the taxpayer is in 26% or 28% AMT bracket. (This example has particular salience for me.)

I won't cry myself to sleep thinking about the president's extra tax burden because he can reduce other charitable contributions if he wants, but it is another example of how complex and counter-intuitive our tax system can be.

California’s Budget Suffers ‘Major Blow’ as Debt Sales Loom

From Bloomberg.com:

California’s revenue collections trailed its forecasts by $1.1 billion during the first three months of the fiscal year, showing new deficits are emerging in the budget Governor Arnold Schwarzenegger signed July 28.

Revenue was 5.3 percent less than was assumed in the $85 billion annual budget during the three months ended Sept. 30. Income tax receipts led the shortfall, as unemployment reached as high as 12.2 percent in August.

“Revenues more than $1 billion under estimates and recent adverse court rulings are dealing a major blow to a budget that is barely 10-weeks old,” Controller John Chiang said in a statement. “While there are encouraging signs that California’s economy is preparing for a comeback, the recession continues to drag state revenues down.”

The latest figures show that California is facing resurgent fiscal strains brought on by the U.S. recession. Since February, Schwarzenegger and lawmakers have cut $32 billion from spending, raised taxes by $12.5 billion and covered $6 billion more with accounting gimmicks and borrowing.

The budget news comes as the most populous U.S. state prepares to sell as much as $15 billion of bonds in the next nine months to refinance debt and fund public-works projects.

California, already the largest borrower in the municipal market, may offer as much as $4 billion of debt during the week of Oct. 26 to refinance the bonds used by Schwarzenegger to cover previous budget deficits. The budget enacted in July would allow the sale of as much as $11 billion more of general obligation bonds through the June 30 end of the fiscal year if financial markets allow, state Treasurer Bill Lockyer said. The exact sale amount hasn’t been decided.

Three Signs that the Economy Could be Poised to Boom

Every day there are new reports predicting how long the recession will last. Some assert that unemployment rates will continue to increase and that we have not yet seen the worst of the housing market crash. However, Peter Cohan of DailyFinance has put together a great upbeat blog entry explaining three signs that the economy could be poised to boom. Check out his informative post below.

Being optimistic by nature, I like to look for good news. So, a handful of recent articles on the economy struck me as a possible harbinger of good times ahead. These reports suggest that consumers and businesses are wising up by borrowing less, living within their means, and -- in the case of a lucky handful of companies -- piling billions of cash onto their balance sheets through initial public offerings. These developments could be laying the groundwork for an economic recovery.

Since 70 percent of GDP growth comes from consumer spending, the reports that consumer spending and borrowing are down clearly suggest short-term bad news. On Oct. 7, AP reported that more people are using food stamps and that more are cooking at home instead of going out to restaurants. With 15.1 million unemployed, this doesn't come as a big surprise.

Nor does news that consumers are borrowing less. Also on Oct. 7, the Federal Reserve reported that consumer debt outstanding fell in August at a 5.8 percent annual rate by $12 billion -- $2 billion more than Wall Street economists expected. Credit-card debt fell by 13.1 percent -- which is why, without cash-for-clunkers, it's unlikely that consumer spending will continue to grow at August's 1.3 percent rise. Indeed, the National Retail Foundation thinks 2009 retail sales will fall 3 percent.

Intriguingly, while consumers are re-equitizing their balance sheets, some companies are adding billions in equity to theirs. AP reports that just yesterday, two companies raised $10 billion in the IPO market -- more than 10 times the $917 million raised in IPOs during 2008's third quarter. Both were well-established companies: Banco Santander Brasil SA pulled in $8.1 billion, while Verisk Analytics (VRSK) -- a company I consulted to in 2002 -- raised $1.9 billion from investors.

Joe Biden on Jobs: Mission Accomplished

From the WallStreetJournal.com:

Vice President Joe Biden is spending much of his time these days stumping for Democrats occupying vulnerable House seats. In the last month, he has campaigned in 10 districts held by freshman Democrats, and raised more than $1 million for them. Political strategists have started referring to him as the House Democrats' "sugar daddy."

But Mr. Biden's gaffes of late may make him more of a liability than an asset for House members whose seats he's supposed to be saving. Last week he pronounced that the stimulus plan was working beyond "my wildest dreams." Three days after the Labor Department announced another 260,000 lost jobs in September, he boasted in Connecticut that the stimulus has "saved or created one million jobs." In reality -- one that too many voters have experienced first-hand -- the economy has lost 2,884,000 jobs since the stimulus passed.

Mr. Biden may be upbeat, but political operatives in the White House are getting slightly panicked about the economy. In the past, lousy job numbers were written off by Robert Gibbs and the White House spin machine because "we are losing jobs at a slower pace." In September, we lost jobs at a faster pace. Larry Kudlow of CNBC notes that the Department of Labor's Household Survey (as opposed to the survey of businesses) indicates a 785,000 job loss in September -- a "really bad number that indicates small businesses just aren't hiring."

If job losses persist, Democrats seem to have no idea how to respond beyond more deficit-financed government spending. "Plan B," says Senator Jim DeMint of South Carolina, "is more of Plan A," i.e., another debt bomb stimulus. Given how out of sync Mr. Biden's euphoria is, one wonders how much longer vulnerable Democrats will be inviting Mr. Obama's chief cheerleader into their districts.

Even the IRS Has Time Limits

I am always writing about how important it is for taxpayers to know their rights, and one of the biggest defenses they have against the IRS is the statute of limitations. So when I saw this detailed explanation of the statute of limitations on Forbes.com I knew I should share it with my readers. Check out their article below.

If you are a fan of Law & Order as I am, you may have a negative reaction when a suspect claims the law can't touch him because of the statute of limitations. By relying on a technicality that hinges on the mere passage of time, it's almost as if the suspect is admitting he did it.

In any tax dispute, you'll want to make good substantive arguments. Still, don't discount the importance of the statute of limitations.

If you face a tax audit and can legitimately point to the statute of limitations to head off trouble and expense, you should. Why should you have to prove you were entitled to a deduction (or have to find and produce yellowed receipts) if it is simply too late for the IRS to make a claim?

Given the importance of the statute--both to heading off audit trouble and to knowing when you may be able to throw some of those receipts away--it is surprising how few taxpayers are statute savvy.

Fortunately, in this part of the tax law, the rules for corporations, partnerships, nonprofit organizations and individuals are consistent. Here's what you need to know.

Normally, the IRS Has Three Years

The overarching federal tax statute of limitations runs for three years after you file a tax return. If your tax return is due April 15, but you file early, the statute runs exactly three years after you file. If you file late and do not have an extension, the statute runs three years following your actual (late) filing date.

Continue reading at Forbes.com…

FHA Shortfall Seen at $54 Billion May Lead to Bailout

The Federal Housing Administration may be asking taxpayers for a bailout within the next year, claims former Fannie Mae executive Edward Pinto. He asserts that the program will incur over $54 billion in unexpected losses in the next twelve months. For those of you who may not be familiar, the Federal Housing Administration helps finance mortgages with low down payments, but had been struggling to keep up with risky loans in an unstable housing market. Check out the following story about the announcement courtesy of Bloomberg.com.

“It appears destined for a taxpayer bailout in the next 24 to 36 months,” consultant Edward Pinto said in testimony prepared for a House committee hearing in Washington today. Pinto was the chief credit officer from 1987 to 1989 for Fannie Mae, the mortgage-finance company that is now government-run.

The FHA program’s volumes have quadrupled since 2006 as private lenders and insurers pulled back amid the U.S. housing slump, Pinto said. The jump has left the agency backing risky loans and exposed to fraud in a “market where prices have yet to stabilize,” he said.

Representative Scott Garrett, a New Jersey Republican, introduced legislation this month to boost the FHA’s minimum down payment to 5 percent from 3.5 percent to help shore up the agency’s insurance fund, a move that could add to the housing market’s burdens as it struggles to recover.