Housing Starts Fall to Lowest Level Since 2009

For every story showing potential for economic recovery, there's another that suggests recovery is still a long way away.

Huffington Post reports:

Groundbreaking on new U.S. home construction fell more than expected in December to its lowest in over a year, suggesting the battered housing sector remains a major roadblock to economic recovery.

U.S. housing starts dropped to an annual rate of 529,000 units, the Commerce Department said on Wednesday, down from November's 553,000 and well below forecasts around 550,000 in a Reuters poll. At current levels, starts account for less than a quarter of their boom-time peaks.

At the same time, building permits soared, a hint of optimism about future demand. Permits jumped 16.7 percent to 635,000, far above a median forecast of 560,000 and the biggest jump since June 2008. Changes to state building codes may have boosted permits in California,

Pennsylvania and New York, the report said. For example, permits surged 80.6 percent in the Northeast.

Housing was at the epicenter of the worst financial crisis in generations, which began when banks started to take a hit from rising defaults in the mortgage sector in the summer of 2007.

Read more at Huffington Post.com...

Three Big Lies About Networking

Networking is absolutely crucial to small business owners. Unfortunately, there are lots of lies and misunderstandings about networking. Knowing the truth about networking helps you build connections that could provide business opportunities. Check out MSNBC’s top three lies about networking.

From MSNBC.com:

1. "I can’t network if I'm not an outgoing person."

Go ahead and breathe a sigh of relief — you don't have to become "Mr. Public Speaker" to be a successful networker. Most people naturally develop a certain level of comfort in dealing with customers, vendors, and others in their day-to-day transactions.

There are many techniques that can make the process a whole lot easier — especially for those who consider themselves a bit introverted. For example, volunteering to be an ambassador or visitor host for a local business networking event can be a great way to get involved without feeling out of place.

When you have guests at your house or office, what do you do? You engage them; make them feel comfortable; you offer them something to drink. What you don't do is stand by yourself sulking about how you hate meeting new people. By serving as a visitor host at your local chamber event, you effectively become the host of the party. Try it, you'll find it much easier to meet and talk to new people.

2. "Person-to-person referral business is old-fashioned."

Yes, networking has been around a long time. It used to be the way that most businesses operated. In a small community everybody knows everybody, people do business with the people they trust, and they recommend these businesses to their friends.

Continue reading here

GOP Spending Cuts Would Affect Millions of People

According to reports, millions of taxpayers are likely to be affected by the spending cuts promised by Republicans in Congress. Those who stand to lose: low-income students and the disabled. This is sure to make the GOP popular…

From the Associated Press:

Low-income students may get smaller grants and the newly disabled might have to wait longer for their benefits. And just about every politician is going to get an earful from the local PTA if school aid gets whacked.

Republicans are finding it's one thing to issue a blanket promise to cut spending, an entirely different matter when you actually take the scissors to $1 of every $6 spent by agencies like the IRS, the FBI, NASA and the National Park Service. Federal layoffs would be unavoidable, the White House warns.

That's the real-world impact of House Republicans' campaign promise to cut $100 billion from the budgets of domestic agencies. Next week, they plan to vote on a resolution setting appropriations for the rest of the year at 2008 pre-recession levels. before President Barack Obama took office.

The vote will be largely symbolic. The actual cuts would have to be made in appropriations bills that would have to clear a 60-vote hurdle in the Senate, where Republicans hold only 47 seats.

The $100 billion promise, contained in the GOP's "Pledge to America" campaign manifesto, is based on cuts from Obama's budget recommendations for 2011, but the actual savings in returning to Bush-era levels would be a little less since the government is operating at last year's slightly lower budget.

Still, compared with 2010 rates and assuming a full year of implementation, Republicans are promising to cut up to $84 billion from nine appropriations bills, cuts that would average 18 percent. Some Republicans, especially in the Senate, may join Democrats in balking when they see their size.

Read more here

GAO: IRS Telephone Help Wait-Time at 6-Year High

The Government Accountability Office released a new report (2010 Tax Filing Season: IRS's Performance Improved in Some Key Areas, but Efficiency Gains Are Possible in Others). Among the findings, the report looked at the long wait time facing taxpayers who call the IRS.

Compared to 2009, the percentage of callers seeking live assistance who received it improved in 2010 and the accuracy of answers remained high, at over 90 percent. However, the average wait time increased. Further, IRS’s annual goal for providing caller assistance was lower than any of the preceding 5 years. However, IRS lacks a standard for what constitutes good customer telephone service that could be compared to its annual goals. Such a standard would make the gap between the annual goals and the standard more transparent.

Hat tip: TaxProf Blog

How to Prepare Now for the Tax Filing Deadline

The IRS officially began accepting returns for most taxpayers, and will allow all returns to be filed in just a few weeks. Although tax filing season has not officially began yet everyone, there are plenty of actions you can take now to help make preparing your return less stressful.

1. Breathe

So many taxpayers get stressed out just at the thought of preparing for tax season. Be sure to take a deep breath, and try not to get too worked up over your tax return. You have plenty of time before the April deadline, and this year you have until the 18^th. By getting started now you are going to have a much less stressful tax season.

2. Gather Tax and Financial Documents

It is a good idea to put together a designated folder for your tax and financial documents. That way, when it comes time to prepare your actual return you will have all of your information already organized. Some items you will want to include in this folder ate W2 forms from employers, 1099 forms if you worked as an independent contractor or earned income from investments, receipts from charitable contributions, mortgage interest statements, vehicle registration bills, etc.

3. Get Copies of any Missing Materials

If you are missing any documents, then you will want to get copies as soon as possible. For example, you might need to print out copies of bank or credit card statements for deduction you intend to claim, but can't seem to find the receipt.

4. Toss (or Shred) Unnecessary Documents

You don't really need every single bank statement or pay stub in your tax folder. If you do want to keep all of these documents put them into a different file. That way you will not feel overloaded with paperwork when you sit down and attempt to prepare your return in a few weeks.

5. Be on the Lookout for your Income Statements

You should expect to receive W2 and 1099 forms some time this month. Be sure that you are on the lookout, so that you do not accidentally throw them into the trash with your junk mail. If you do not get your W2 by February then you will want to contact your employer to make sure it was sent to the correct address.

6. Find your Return from Last Year

Make sure that you include your most recent return at the front of your tax file. Unless you changed jobs, or made a major tax move like purchasing a home, then you should be able to use your old return as a guide for completing you new one.

7. Verify the Exact Amounts of Charitable Deductions

The IRS has been cracking down on charitable contributions over the past couple of years. Be sure to look over your receipts and make sure that you can substantiate the market value of your contributions. Additionally, if your contributions exceed $500 you will need to complete IRS Form 8283, and if any item is valued at over $5,000 then you must obtain a written appraisal. For more information on charitable contributions check out this article on RDTC.com.

8. Anticipate Errors

There are a few common errors that many taxpayers make on their returns. Before you even begin to think about preparing your return look over some of these common mistakes, so that you are mindful of them once tax season begins.

9. Think About Hiring a Pro

If you have a complicated tax account, or simply do not want to hassle with preparing your own return then you should think about hiring a tax professional. Check out a few local tax preparation offices in your neighbor hood and make an appointment before they start getting busy.

Retail Sales Rise For Sixth Month In A Row

More good news for the economy! Retail sales are up, meaning that despite Federal Reserve chairman Ben Bernanke's expectations of only moderate economic growth this year, American taxpayers are more willing to spend their money.

From HuffingtonPost.com:

This change in attitude is reflected in the numbers. The Commerce Department reported that retail sales were up in December, the sixth month in a row, making for the strongest holiday sales retailers have seen in recent years.

Sales rose 0.6 percent last month to $381 billion, lifting sales for the year by the largest amount in more than a decade.

Speaking to the Senate Budget Committee last week Ben Bernanke expressed the hope that "a self-sustaining recovery in consumer and business spending may be taking hold."

Despite the private sector adding 113,000 last month and 50,000 jobs in November, Chris Christopher, the IHS Global Insight economist who conducted the analysis, expects the unemployment rate, currently 9.4 percent, to remain above 9 percent in 2011.

"Businesses are hiring people, but they're not hiring them at a fast enough rate because they're waiting to see consumer spending increase more. They're still a little hesitant," Christopher said.

Continue reading at Huffington Post.com...

Will Obamacare Really Kill 1.6 Million Jobs?

Conservative leaders in the House of Representatives are hoping to vote to repeal the health care reform package, and their main point is that the legislation will kill 1.6 million jobs. There’s been a lot of rhetoric about the “job-killing heath care bill,” but is that really true? Not so much, says Factcheck.org.

Daily Finance reports:

The Republicans certainly feel that it will, and they've put a number to the claim: 1.6 million jobs lost. They've sponsored a bill they call the Repealing the Job-Killing Health Care Law Act, which is likely to come up for a vote early next week. The bill will probably pass the House, where the Republicans have a majority, but will likely fail in the Democrat-controlled Senate. Even if it passed the Senate, though, President Obama would certainly veto the proposal.

The Republicans have based their claim that the law will kill 1.6 million jobs on an August 2010 report by the Congressional Budget Office, which said the Affordable Care Act would reduce the amount of labor in the economy by about 0.5%, because more people would choose to retire earlier, thanks to the reduced cost of health insurance.

But as an analysis by FactCheck.org points out, having people leave the job market because it has become financially possible for them to retire is entirely different from killing jobs. The FactCheck report says, in part: "The House Republican leadership. . . badly misrepresents what the Congressional Budget Office has said about the law. In fact, CBO is among those saying the effect 'will probably be small.'"

An Impediment to Hiring

The GOP's political leaders aren't the only ones who have issues with Obamacare. Another criticism has been made by the U.S. Chamber of Commerce, a private business-lobbying group. The chamber maintains that one provision -- that small businesses with more than 50 full-time employees must provide adequate health care coverage for their workers or face a penalty of between $2,000 to $3,000 per worker -- is causing many small firms to stop hiring.

Read more here

Congress Urged to Raise Debt Limit

Economists are warning that Congress must allow the country to borrow more to avoid a debt default that would wreak havoc on financial markets and imperil the U.S. economy. Apparently both Democratic and Republican leaders in Congress agree that the debt limit must be increased. At last! Bipartisan agreement!

From Reuters.com:

Threatening not to raise the $14.3 trillion debt ceiling -- the amount of debt the country is legally allowed to issue -- is "like playing with fire," Democratic Senator Charles Schumer said on NBC's "Meet the Press."

"If we didn't renew the debt ceiling ... We might permanently threaten confidence of the credit markets in the dollar, which could create a recession worse than the one we have now or even a depression," he said.

Republican Senator Tom Coburn also predicted a dire outcome if lawmakers were unable to reach an agreement to put the country's fiscal house in order.

"If in fact the bond vigilantes come after the government bonds in the next two to three years, we will have such bigger pain than not raising the debt ceiling," Coburn said on the same television program.

The Obama administration is under pressure to put a cap on spending to curb its $1.3 trillion budget deficit. Coburn said he thought he would vote in favor of raising the debt ceiling only if there was a specific amount of spending cuts on the table.

Continue reading here

Own a Business? 6 New Tax Breaks

If you own a small business, you know how expensive it can be. Looking for more ways to save? You must check out this article from CNN.com explaining six important new tax breaks. I've included a snippet of the article below.

Health care tax credit:

Small businesses that pay at least half of their employee's health coverage can get a significant tax refund.

The maximum credit goes to businesses with 10 or fewer full-time employees with annual wages that average $25,000 or less. The break phases out for firms with 25 employees or that pay average wages above $50,000.

For 2010 through 2013, the tax credit covers up to 35% of the money that a qualifying business spends on its health insurance premiums. In 2014, the top tax credit bumps up to 50%. Tax-exempt organizations can claim 25% in the first time period and 35% after that. The credit is available for a maximum of six years: 2010 through 2013 and for any two years after that.

Health insurance deduction for self employed:

Are you your own boss and paying for your own health insurance?

Normally, you can deduct your insurance costs from your business profits, but you can't deduct those costs from your self-employment taxes. But in 2010, the self-employed can deduct their health insurance costs from their business profits for both taxes. Let's say Sally, an architect, makes $50,000 in net income and pays $6,000 for health insurance.

Read more at CNN.com...

IRS Socks TV Personality Montel Williams with $1 Million Tax Lien

Another celebrity has been hit with a massive tax bill.

From The Smoking Gun:

TV personality Montel Williams has been hit with a $1 million federal tax lien, according to Internal Revenue Service documents recorded this week in New York City.

Williams, who hosted his eponymous talk show for nearly twenty years, is being dunned in connection with his 2008 and 2009 individual tax returns. According to the lien (click here to view), the combined amount owed by Williams and his wife Tara for the two years totals $1,039,609.41.

The 54-year-old’s troubles this year have also included his January 5 detainment at the Milwaukee airport, where Transportation Security Administration agents discovered drug paraphernalia in his luggage. Williams was issued a $484 citation for possession of a pipe, and was allowed to continue on his way.

Continue reading here

Ex-Banker says he's Giving Wikileaks Files on Rich

Earlier today a former Swiss banker on Monday supplied documents to WikiLeaks that allegedly contain information about 2,000 account holders. Rudolf Elmer is an ex-employee of Swiss-based Bank Julius Baer.

The Associated Press reports:

He has previously offered files to WikiLeaks on financial activities in the Cayman Islands and faces a court hearing in Zurich on Wednesday to answer charges of coercion and violating Switzerland's strict banking secrecy laws.

"I do think as a banker I have the right to stand up if something is wrong," said Elmer, who addressed reporters at London's Frontline Club alongside WikiLeaks founder Julian Assange.

"I am against the system. I know how the system works and I know the day-to-day business. From that point of view, I wanted to let society know what I know. It is damaging our society," Elmer said.

Assange praised the ex-banker's attempts to expose alleged shady practices in the financial industry. He was making a rare public appearance since he was released on bail on Dec. 16 following his arrest on a Swedish extradition warrant.

Continue reading here

Retiring in 2011? What you Need to Know

If you are planning to retire this year, then you have a lot to prepare for. To help out, MSN Money has put together a list of all the things you should be aware of. I've included a section of their article below, or you can click here for the full list.

Keep up with Obamacare

The ramifications of this major legislation from the Obama administration may have a substantial impact upon the type and cost of health care that retirees will receive in the coming years. However, the shift of power to the Republicans in the November 2010 elections may ultimately overturn this recently-signed legislation.

Maintain the status quo in IRAs and retirement plans

Congress decided in December to freeze all retirement plan contribution limits and other thresholds through 2012. Those who need to begin taking distributions or roll over their plans can now use the current limits to compute their withdrawals accordingly.

Alter your estate plan if necessary

Taxpayers were allowed to leave an unlimited amount of assets to heirs free of estate tax in 2010. For the next two years, a $5 million dollar limit per taxpayer will be imposed ($10 million for married couples). Those with credit shelter trusts or other sophisticated estate planning tools may need to alter the amounts in these trusts or the level of death benefits in their life insurance policies accordingly.

Tiptoe back into the market

Those who have been sitting on the sidelines waiting for the markets to calm down may want to consider dipping a foot back into equities in the coming year. A dollar-cost averaging program may be good way to do this, as this will allow investors to take advantage of continued market swings by purchasing fewer shares when prices are high and more when they fall.

Read more at MSN.com...

Questions for the Tax Lady: January 17th, 2011

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: Did the IRS really extend the deadline to file this year? Does it apply to all taxpayers, or only in Washington D.C.?

Answer: Yes, the IRS did in fact extend the filing deadline until April 18, 2011. The reason for the extension is Washington DC observes Emancipation Day, which falls on April 15 this year. By law, all holidays Washington DC observes impact tax deadlines the same way federal holidays do: so all taxpayers have three extra days to file.

If you file for a 6 month extension, you will have until October 17, 2011 to file.

But remember, three extra days is no excuse to procrastinate! Get your taxes prepared and filed in a timely manner to avoid that last minute stress, and the possibility of missing the deadline!

Question: I found out I owe the IRS about $3,500 from last year. Do I have to pay it all at once or can I sign up for a payment plan?

Answer: Since your tax debt is relatively small – although it probably doesn’t feel very small to you! – you should be able to get a streamlined installment agreement. This allows you to repay your debt in monthly payments, instead of in a lump sum. You will still pay interest and penalties, so the sooner you pay it off, the smaller the financial impact will be for you.

To request an installment agreement, you can use the IRS’s online application here.

Law Could Allow IRS to Help Find Kids

In a continuing battle between taxpayer privacy and protecting children, we may finally strike a compromise. A new bill sponsored by Senator Amy Klobuchar would allow the IRS to give police addresses of people who claimed missing children as tax dependents. Currently the agency is barred from providing this information, a law that has hampered police investigations for year.

From StarTribune.com:

"This is a great tool for law enforcement," said Patty Wetterling, mother of Jacob Wetterling, who disappeared near St. Joseph, Minn., in 1989 and still has not been found. Wetterling, who is vice chairwoman of the National Center for Missing and Exploited Children and was a candidate for Congress in 2006, accompanied Klobuchar at a news conference Sunday in Hopkins.

Klobuchar said there are numerous examples of noncustodial parents or other child abductors who have sought tax deductions by claiming the children they've taken as deductions. The adults may have changed their own names but use the child's Social Security number on tax returns.

A 2007 study by the Treasury Department, which includes the IRS, examined the Social Security numbers of 1,700 missing children and the relatives suspected of abducting them, and found that more than one-third had been used in tax returns filed after the abductions took place. But the IRS cannot release any information on the returns unless a parental abduction is being investigated as a federal crime and a federal judge orders the information released. Most parental abduction cases are investigated by state and local prosecutors.

Hopkins Police Chief Mike Reynolds said that the setup amounts to "a one-way street" between the IRS and authorities searching for missing children. "This is a bill that just makes sense," said Reynolds, who also spoke at the news conference.

Continue reading at StarTribune.com...

Top 10 Everyday Legal Tips

Being an attorney, I get asked legal questions every day, since pretty much everyone has an issue with the law at some point in their lives. Entrepreneur.com put together a list of 10 everyday legal tips. This list covers the questions I hear the most, so nice job! Hopefully this list will save me from giving free legal consultations at every party I attend. You can check out a portion of the list below, or head over to Entrepreneur.com for the full text.

1. Make a will.

Things can get messy if you don't, and you won't be around to sort it all out. You should decide now who will inherit from you, and who won't, and name a guardian for your children, among other things. Additional estate planning documents are often made at the same time as a will: a trust (if needed), powers of attorney and a living will (saying whether you want them to pull the plug). Estate planning allows you to control what happens to you and your assets, and it can save your family from having to make some difficult - and often contentious - decisions.

2. Sign a prenup.

You don't have to be rich or famous. If you own a business or have children from a previous marriage, or simply want to keep some of your property separate, give it some thought. A prenuptial agreement can spell out what happens in the event of divorce or death. But don't write it up on your own. Make sure you and your soon-to-be spouse each consult with an attorney. Be upfront and disclose everything. An invalid prenup will get thrown out by the court.

3. Know your rights.

If you are pulled over by the police, be cooperative and polite. You'll probably be asked for identification, registration and proof of insurance, and you should comply. If the officer asks you questions about where you were, where you're going or whether you've had anything to drink, you do not have to answer. If they ask to search your vehicle

Tax Beatdown Continues for Alicia Keys Husband

From DET news.com:

A giant tax bill makes a pretty poor baby shower gift, but that's what the IRS and New York gave singer Alicia Keys's husband, record-producer Swizz Beatz, who owes more than $2.6 million in delinquent taxes, records show.

Beatz, 32, and Keys welcomed a baby son in mid-October. Days later, the state of New York slapped yet another tax lien on Beatz, real name Kasseem Dean. Not to be outdone, the IRS sent its regards this week.

What's owed:

• The IRS filed a $283,562 lien against Swizz Beatz on Monday with the New York City Register.
• The state of New York filed a $134,738 tax warrant against him and his ex-wife, R&B singer Mashonda on Oct. 23. The warrant is filed with the New York County Clerk.
• The IRS filed a $652,727 lien against Swizz Beatz, real name Kasseem Dean, on June 3 with the Rockland County (N.Y.) Clerk. According to the lien, which you can see here, he owes income taxes from 2008.
• The state of New York filed a $162,300 tax warrant against Dean and his ex-wife Feb. 4, 2009, with the New York County Clerk.
• The IRS filed a $556,986 lien against Dean and his ex-wife on Aug. 18, 2008, in Rockland County. They owe 2007 income taxes, according to this public record.
• The IRS filed an $842,645 lien against Dean and his ex-wife March 4, 2008, with the Somerset County (N.J.) Clerk. According to this lien, they owe income taxes from 2006.

Continue reading here

Consumer Bankruptcies Hit 5-Year High in 2010

According to estimates, the number of American taxpayers who filed for bankruptcy protection in 2010 was the highest in nearly half a decade. Experts predict these numbers could increase in 2011 as Americans continue to struggle with debt and an uncertain economy.

Reuters reports:

Roughly 1.53 million consumer bankruptcy petitions were filed in 2010, up 9 percent from 1.41 million in 2009, according to the American Bankruptcy Institute, citing data from the National Bankruptcy Research Center.

Filings in December totaled 118,146, up 4 percent from a year earlier and 3 percent from November's total.

The full-year total is the highest since the 2.04 million recorded in 2005, when there was a rush to seek bankruptcy protection ahead of a stricter federal law taking effect in October of that year.

Samuel Gerdano, executive director of the ABI, said filings are rising even as consumers try to cut spending and debt after the 2008 financial crisis and accompanying recession, and with the unemployment rate at 9.8 percent.

He said there is usually a 12- to 18-month lag between declines in consumer spending and bankruptcy levels.

According to the Federal Reserve, U.S. consumer credit outstanding has fallen in 19 of the last 21 months for which data are available, declining to $2.41 trillion in October 2010 from $2.57 trillion in January 2009.

"Consumers have been on sort of a strike when it comes to taking on more debt, as they become more aware of the dangers of high debt burdens in a weak economy," Gerdano said.

Continue reading at Reuters.com...

5 Steps on How to File For Chapter 7 Bankruptcy Successfully

These days millions of Americans are looking to bankruptcy as a solution to their financial problems. For some, bankruptcy provides the fresh start they so desperately need; however, it is a decision that should not be taken lightly. If you and your family do decide that bankruptcy is the right decision, here are the 5 steps you will need to take, courtesy of Mortgage11.com.

Consult a competent bankruptcy lawyer

Proper bankruptcy information could be essential before you actually file for chapter 7. Hence, it could be vital for you to consult a competent bankruptcy attorney who is well versed with the new bankruptcy rules and regulations as well as filing procedures. But you need to furnish complete information regarding your current financial position during the free consultation.

Do your home work thoroughly well

You need to do some preliminary homework after knowing chapter 7 bankruptcy requirements from your bankruptcy lawyer. Normally, you are required to submit copies of past 6 pay stubs, statements from bank or on retirement accounts, credit card statements, copies of tax returns for the previous 3 years, details of property assets and credit report too. In addition, you need to answer a lengthy questionnaire and even undergo credit counseling which is mandated by the new bankruptcy laws.

Prepare the paperwork and sign the petition

Once you are ready with the required information, your lawyer would prepare a petition. All that you need to do is just review and sign it. In any case, while doing so you need to verify that every information provided in the petition is correct and accurate. After you sign the documents, the bankruptcy attorney would file your case in the court. In the next step, you would come to know what happens when you file bankruptcy.

Attend the “341 hearing”

The entire bankruptcy filing process can give you a lot of anxiety. After you have filed the case, you could be required to attend a “341 Meeting” involving your lawyer, creditors and the court appointed “Trustee”. Usually, such a meeting lasts for hardly 3 minutes and could be over within no time.

Go for post-filing class and wait for 60 days

You need to go for a post-filing class at the earliest. This could be important otherwise all your hard work could go in vain. And after the “341 Meeting” is over, you could be required to wait for about 60 days, as per bankruptcy rules, during which your creditors or even Trustee can file an objection. If there are no objections, you could qualify for a discharge of debts.

Read more here

IRS Releases 2010 Taxpayer Attitude Survey

Yesterday the IRS Oversight Board released the results of its most recent Taxpayer Attitude Survey. There were 1,000 respondents, and here are some of the most interesting findings.

How much, if any, do you think is an acceptable amount to cheat on your income taxes?
A little here and there, 8% (down 1 percentage point from last year).

How important is it to you, as a taxpayer, that the IRS does each of the following to ensure that all taxpayers honestly pay what they owe:

Ensures high-income taxpayers are reporting and paying their taxes honestly? Very important, 78% (all-time low, down 5%)
Ensures small businesses are reporting and paying their taxes honestly? Very important, 73% (down 3%)

How much influence does each of the following factors have on whether you report and pay your taxes honestly –

Fear of an audit? Great deal of influence, 35% (down 4%)

Belief that your neighbors are reporting and paying honestly? Great deal of influence, 21% (up 4%)

Hat tip TaxProf Blog

Delinquent on Your Taxes? You Can Still Get a Federal Contract

From Washington Examiner.com

Federal contractors receive an estimated $377.5 billion in taxpayer funds, and now the IRS inspector general reports that the tax agency isn't bothering to complete tax checks and financial capability surveys before awarding contracts. According to a new report, the Treasury Inspector General for Tax Administration (TIGTA) reviewed 135 contractors with an award equal to at least $250,000. Fifteen percent (20) of those reviewed had delinquent tax liabilities totaling $5.2 million. And tax checks were not completed for seven of those 20 contractors.

In other words, 13 contractors still got awards despite being known to be delinquent.

From the report:

TIGTA believes IRS contractors should be held accountable to the same tax compliance requirements as IRS employees. If IRS employees fail to file accurate and timely income taxes, it can result in disciplinary action, and even loss of employment.

Guidelines do not require IRS employees to complete tax checks or financial capability surveys at the time a contract is up for renewal. Our analyses showed the IRS renewed the contracts for 17 contractors, of which six had delinquent tax liabilities that totaled over $943,000 at the time of the original award. As of March 2009, the delinquent tax liabilities increased by more than 500 percent to approximately $4.9 million.

Read more here