Is The Euro Doomed?

When the EuroZone formed in the late 1990’s, Milton Friedman, who is widely regarded as one of the greatest economists of the 20^thcentury, was a very outspoken critic of the idea. In fact, he is notably remembered for confidently communicating his belief that the Euro would not even be healthy to survive once it hit its first major recession. “It seems to me that Europe, especially with the addition of more countries, is becoming ever-more susceptible to any asymmetric shock.  Sooner or later, when the global economy hits a real bump, Europe’s internal contradictions will tear it apart.” (Milton Friedman)

Just as Friedman foresaw over a decade ago, the EuroZone is now experiencing major threats to its very survival.  As forex traders, regardless of whether our strategy is technical or fundamental in nature, it is very helpful to comprehend these key systemic risks that are very present in the FX Market, and to comprehend how these risks play out in the currency value of the Euro.

One way to increase one’s understanding of the FX Market and comprehend how these major, a mortal should visit a few of the best forex brokers.  While some brokers are only after commissions off your trades, and have no interest in you truly becoming a calibre trader, there are a number of great brokers that want to help a mortal comprehend this marketplace.

As we are all very aware, the global economy has experienced a very deep recession as a result of the global credit crisis of 2008.  The general path of a Central Bank during a recession is one of low interest rates, simple credit, and financial stimulus.  Central Banks achievement this path in hopes of stimulating a bleeding economy.  During a recession, the economy slows, workers are ordered off, and, as a result, consumers start to spend less.  This can be a death cycle.  If consumers continue to not spend money, then the economy has no chance of rebounding, and companies will not start to grow again, which means unemployment will continue to increase, etc.

This deadly cycle of consumers not spending, companies not growing, companies therefore not hiring, and consumers continuing not to spend, is why Central Banks lower interest rates and infuse monetary stimulus into the economy during a recession.  They are filling the void the consumer has left.  They do this in hopes of “stimulating” the economy back to healthy growth.  Once the economy shows signs of strength, the Central Bank slowly begins to remove monetary stimulus from the economy.  This is the sticking point, though.  If stimulus is removed too early, a fragile economy might slip back into recession.

This is the current say of the EuroZone, and why Friedman thought the Euro would not survive through a major recession.  Not all countries rebound from a recession at the same speed or velocity.  In the EuroZone, however, all countries are subject to the same fate meted out by the Central Bank.  If Germany is rebounding well, and growth is steadily increasing, they will need to increase interest rates in order to stem inflation.  However, if Greece is still lagging in growth, they need low interest rates to continue to stimulate their economy.  If interest rates are raised in order to stem Germany’s inflation, this will have dire effects on a struggling Greek economy, and it will act as a very real threat to thrusting Greece back into a deeper recession.

Q&A: Can 6 years old credit card judgement be collected by lawyers and how?

Question by NICK: Can 6 years old credit card judgement be collected by lawyers and how?
I have a credit card default judgment of 00 from another county in California that I used to live in. I was not serve and did not know about it until now, since I moved away 6 years ago. Now they must have sold the judgement to a law firm or collection law firm. The law firm sent collection letter and notice plus interest into ,000 they trying to collect. They also changing the study of creditor of the original judgement into their name. It was not on credit report for the past years because the debt is 8 years ago. Should I ignore them or negotiate? What are my option? Please Help and no short answer…

Best answer:

Answer by Mustanger
Answers here are not what you need. What you need is to consult a lawyer versed in this type of action in California. What you get here are mostly views and views are like rear ends. Everyone has one and they all stink. Find a knowledgeable lawyer. It’s the only way to find out what you rights under California law are.

What do you think? Answer below!

Savings account small print

Savings statement small print

Research into some of the top interest paying savings accounts has suggested that some of the products might not be as a great as suggested! It has been found that some of the top paying accounts often contain some nasty terms and conditions in the small print, some of which prevent or prohibit the saver getting the highest doable interest rate.

One of the most common sneaky small print terms is to restrict the amount of withdrawals that can be made in any one year or even pay no interest for months where the saver has withdrawn funds. Another key small print term which often restricts or varies the amount of interest attained is the terms of a bonus. Some accounts offer a bonus rate that will last for a period of time, after which the rate is variable and can be modified at anytime by the bank. With these deceptive terms and conditions now being applied to some of the top rate accounts on the market it is being suggested that savers take extra care when signing up. It is essential that as well as using a savings calculator to refer the ideal paying accounts investors should also analyse each potential statement thoroughly. This should include ensuring the bonus term is fixed and not healthy to drop considerably as a variable rate, and understanding what restrictions apply to withdrawals: how many are granted in a year? Is interest still paid in a month where money is withdrawn?; and also ensuring that the statement the saver has is offering the ideal rate acquirable at any time. ,p> As mentioned a savings calculator is a useful tool in identifying the ideal interest paying savings accounts on the market and can help investors find the ideal home for their savings.

Credit Card Judgment – How to Remove From Your Credit

Credit Card Judgment – How to Remove From Your Credit

A credit card judgment is entered upon by a court. This means that a lender has sued your for payment of a debt.

This is a last resort for lenders, and will cause a great amount of alteration to your credit rating.

This mark can appear on your credit history for up to 10 years. It will likely prevent you from being approved for any future credit.

A judgment can cause the interest rate on your credit card to increase. This is one of the most severe marks to have on your credit report.

You can have this mark removed from your credit. The most effective way is to dispute the accuracy or validity of the mark.

This is done through mailing a dispute letter to apiece credit agency challenging the accuracy or validity of the listing. You can also hire a professional credit service to do this for you.

The benefits of a professional are that they can often get a credit agency to conduct an investigation faster than an individual. This is because individuals are often given the run around.

The credit bureaus are not likely to respond to the first dispute letter no matter who it comes from. This is because it costs the credit bureaus money to investigate dispute claims.

Often a agency response to a dispute letter is a letter requesting more information about the disputed listing. Credit bureaus will do this regardless of their need to get more information. It is simply a stall tactic.

However once an investigation is performed a listing is often removed regardless of its accuracy. This is because it costs the lenders too much money to verify uncollectable debts.

Once you have a valid dispute honored and the investigation is performed you probably will have the negative mark removed.

Pay Day Loans Compared to Credit Card Cash Advances – Which Short Term Loan is Better

Pay Day Loans Compared to Credit Card Cash Advances – Which Short Term Loan is Better

Pay day loans have recently gone under an increased scrutiny from nearly all levels government who claim they are charging to high of an interest rate on the short term loan. Some says have passed legislation which capped the interest rate payday lenders are granted to charge. This new legislation has shut down many retail stores throughout the effected says but has also created an emerging and very competitive online payday lending market. As new lenders consistently move online for issuing pay day loans the online lenders are lowering their interest rates to stay competitive. This has finally resulted in a superior deal for the consumer and a current study has found that online pay day loans consistently offer consumers a superior rate than the retail outlets.

Now let’s compare taking out a short term loan through a payday lender as opposed to getting a credit card cash advance. Let’s begin off with the credit card cash advance. These short term loans usually carry an interest rate of about 29% on average and are typically paid back with the minimum payment throughout the course of a year by the majority of consumers. What the credit card company doesn’t tell you is that the cash advance is place at the bottom of your repayment cycle and therefore all the items on the credit card before the cash advance must be paid off first. Meanwhile your credit card company is charging you a high interest rate each month which can add up very quickly.

If you really want a short term loan that can be paid back and done with then you might want to think about pay day loans. A typical finance charge for this short term loan is for each 0 that you borrow. Bad credit is usually not an impediment is getting a payday loan. The most important thing that lenders look at is whether or not you have a job or a steady source of income. Having a job is really the ticket to getting the loan. The lender will use your next pay check as a security for repayment and if you can't repay the loan on your next payday most lenders will give you an extension until your next payday.

Pay day loans are typically issued anywhere from 0 – ,500 and can be deposited directly into your checking/savings statement usually within 24 hours of filling out an application. For consumers who need to get cash swift then a pay day loan is by far the most convenient method is doing so.

I would strongly advocate that you search for a loan online as that’s where you will most often find the ideal deal. There are a few good websites out there where you can fill out one application and receive multiple quotes from various lenders. These multiple lender websites will make the lenders compete for your loan and therefore you are guaranteed to receive a true market rate.

For a payday cash advance loan lender that has consistently provided competitive rates check out this link:Legitimate Cash Advance LendersMatthew Sofa is a graduate student of The Ohio Say University Fisher College of Business where he majored in finance. His areas of specialization include e-commerce, financial markets, and the payday loan industry. His goal of the majority of these articles is to educate consumers on the payday loan industry. Hopefully my years of experience in the financial industry will help consumers make wise financial decisions.

More Credit Card Cash Advance Articles

Perilous Credit Card Cash Advance

Perilous Credit Card Cash Advance

     Taking a credit card cash advance is a certain way of getting into debt. Credit card companies offer many incentives of low interest and grace periods for payment for purchases. A different rule is applied for cash loans given by these companies. The fees attached to advance loans are high and no grace period is given as an incentive to customers who borrow cash on their credit cards.

     People who have credit cards often borrow cash through ATMs using their credit card for emergencies. Unlike other cash advance loans, there are many high fees attached to these loans. The ATM charges a fee for withdrawal of the amount for starters. These companies starts charging interest on the cash advance the moment the money is withdrawn. These cash advances are difficult to keep track of because the same card is used for buys and bill payments. There are companies that offer no fee advance cash loans but these loans are extremely rare. Some card companies give advance checks to customers. These checks are advances and if used in excess by the customer, it can land the customer in debt.

     Credit card cash advances need to be repaid as soon as possible. This is because these lender dues are the first debts to adversely impact a credit score. Repaying a credit card advance is difficult because any payments will be first applied by the company to buys and last of all to the loan. Customers should refrain taking short term loans during an emergency because the interests are high and repayment is difficult.

More Credit Card Cash Advance Articles

Some Thoughts on Bankruptcy

Some Thoughts on Bankruptcy

If you have found yourself overburdened by debt and your income at the present time is not enough to cover your bills than you might want to think about bankruptcy as one of your options. If this is the case then there are a few things that you will want to take into consideration. You sertainly don’t want to let your creditors know that you are considering bankruptcy, or they make the preemptive move of seeking a default judgement against you.

If you are going to try to negotiate with your creditors then you should seek out the help of a credit counselor who can assist you in this area. If you have made the decision file for bankruptcy then you will definatly need the help of a eligible bankruptcy attorney. After your attorney files the papers at the court clerks office your creditors will then be notified that you intend to have your bills discharged.

This will be the beginning of your creditors trying to negotiate with you seriously. Your attorney can advise you on these matters, because one of the things that they will try to get you to do is to reaffirm your loans which will make them exempt from bankruptcy proceedings. Depending on what they are offering you you might select to do this and this is quite often the case.

You have to bear in mind that a bankruptcy will alteration your credit for years to come and it will be very difficult to get credit with a bankruptcy on your record. There are many things that a good credit councilor can do for you such as arranging a low interest individualized loan that you can use to pay off any burdensome high interest debt that you might have. It is important to bear in mind that bankruptcy should always be your last resor

More Default Judgement Articles

What is a credit card judgement and what would happen if they filed one on me?

Question by sherry c: What is a credit card judgement and what would happen if they filed one on me?
I pay so much money to a lawyer each month (signed papers so I could do this) but this month I had trouble getting the money. I sent the payment off but it is going to be late and if it is too late getting there they are going to file a judgement. I would gladly pay off the bill if I had the money. I was stupid and got a credit card not fully understanding about the interest and all that.

Best answer:

Answer by ask_marilynne
First the terminology is that a judgement is filed by a lawyer basically suing you for the money owed to the creditor. I hope that you haven’t gone to one of the agencies that tell you that they will settle your debts for a fraction of the amount owed.

“Dealing with a debt collector can be one of life’s most stressful experiences. Harassing calls, threats, and use of dirty language can drive you to the edge. What’s worse, a collector might humiliate you by contacting your employer, family or neighbors. You might even be hounded to pay a debt that is not rightfully yours. Sure, collection agencies have a job to do. Even so, there are limits on how far a debt collector can go.

This guide explains the federal Fair Debt Collection Practices Act (FDCPA) and other laws that apply to debt collectors. We wage information about how to stop calls from collectors and how to correspond with them about your statement or to dispute a collection action. We also explain your right to privacy, and how debt collection efforts might affect your job, your credit report, even information in your medical files. ”

more at www.privacyrights.org

Add your own answer in the comments!

Installment Loans for Payday Loans: Fulfill Monthly Needs

Installment Loans for Payday Loans have been designed especially to meet the monthly needs of the people. Some people need massive amount money then only they comprehend themselves to be eligible to apply for loan because they think that loans meant to borrow a lot of money. This is not so these days because some working people who are entirely dependent on their monthly salary need Installment Loans for Payday Loans. It is so because if they need a small of amount of money they have to go without money. But now some lenders and loan lending companies have designed Installment Loans for Payday Loans so that they can fulfill their monthly needs.

Applying for Installment Loans for Payday Loans is very simple all you have to do is to fill an online application form and your money is transferred into your account. There are some eligibility criteria to apply for these loans like other loans. Borrower needs to be more than 18 year old as well as he or she should be an earning soul. Borrower should be earning at least $1000 per month when he or she applies for Installment Loans for Payday Loans. This ensures to the lender that borrower will be healthy to repay money in time and lender will not be in loss.

Through Installment Loans for Payday Loans, you can get amount up to $1500 starting from $100. Interest rate varies from lender to lender and in most of the cases rate of interest for short-term loans Installment Loans for Payday Loans is higher than long-term loans. Duration to repay Installment Loans for Payday Loans is between 5 to 15 days. You do not have to worry about repaying the Installment Loans for Payday Loans because as soon as your salary comes in your statement on your payday, it is automatically transferred into the lenders account. Because of this you must posses an active checking statement for money transaction when you apply for Installment Loans for Payday Loans. Installment Loans for Payday Loans are good option for the people who need money for a short period of time as well as need a small amount of money to spend on some suddenly occurred monthly expenditure.

IRS Attacks Many Business Owners With Million Dollar Fines

Article from IMFPubs

by Lance Wallach

January 22, 2010

IRS Attacks Many Business Owners With Million Dollar Fines

If you were or are in a 412(i), 419, Captive Insurance, or section 79 plan you are probably in huge trouble. If you signed a tax return for a client in one of these plans, you are probably what the IRS calls a material advisor and subject to a maximum $200,000 fine. If you are an Insurance Professional that sold or advised on one of these plans, the same holds true for you. Business Owners and Material Advisors needed to properly file under section 6707A, or grappling massive IRS fines. My office has received thousands of phone calls, many after the business owner has received the fine. In many cases, the accountant files the appropriate forms, but the IRS still levied the fine because the Accountant made a mistake on the form. My office has reviewed many forms for Accountants, Tax Attorneys and others. We have not yet seen a form that was filled out properly. The improper preparation of these forms usually results in the client being fined more swiftly then if the form were not filed at all. I have been an expert witness in law suites on point. None of my clients have ever lost where I was their Expert Witness.

The IRS will be soon attacking section 79 scams I am told. My primeval articles by AICPA and others in the 90s predicted attacks on 419s, which came true. My 412(i) article predictions came true. The section 79 scams soon will be attacked. Everyone in them should file protectively. Anyone that has not filed protectively in a 419 or older 412(i) had superior get some good advise from someone who knows what is going on, and has extensive experience filing protectively. IRS still has their task forces auditing these plans. Then they will move on to 79 scams etc. including many of the illegal captives pushed by the insurance companies and agents. Not all captives are illegal. I am an expert witness in a lot of cases involving the 412(i) and 419. It does not go well for the agents, accountants, plan promoters, insurance companies etc. The insurance companies settle first leaving the agents hanging out there. Then in many cases they fire the agents. I was just in a case as an expert witness where a massive well know New England mutual based insurance company did just that.

If you are an insurance professional do not count on your insurance company to back you up. More likely they will stab you in the back, based on what I have seen. One of the agents was with the company over 25 years and was a leading producer with lots of company awards. Be careful. If you sold, gave tax advice, or signed a tax return and got paid a certain amount of money you might be a material advisor. Under the newest proposed regulations you had to file with the IRS to refrain the $200,000 $100,000 fines. You had to fill out the forms properly. You had to advise those that you advised about the plans or sold the plan to. You had to send them a note, or call them, giving them the number that the IRS had assigned to you as a Material Advisor. This is the number that you obtain after you file the appropriate forms for yourself. Even though you obtain a number you still might have filed your forms improperly or finished them wrong. Many accountants have called me after their clients were fined $800,000 or more by IRS for improperly filing, or not filing under 6707A. A plan administrator called me after a lot of his clients were fined millions. He told their accountants to file 8886, and most of them did. All of the clients were fined shortly thereafter. The forms need to be filled in exactly correct. In our numerous talks with IRS we were told if filed out wrong the fine is still imposed. BE CAREFUL please be advised we have not seen a form that has been filed out properly. Many accountants, tax attorneys, etc., send us their forms to be reviewed, most after they file for one client who then gets fined about one million dollars under the regulations. I DO NOT do the forms. A former IRS agent of 37 years, CPA, tax professor does them, as does another mortal that I know.

If you are a small business owner, accountant or insurance professional you might be in huge trouble and not know it.  IRS has been fining people like you $200,000.  Most people that have received the fines were not aware that they had done anything wrong.  What is even worse is that the fines are not appeal-able.  This is not an isolated situation.  This has been happening to a lot of people.

Currently, the Internal Revenue Service (“IRS”) has the discretion to assess hundreds of thousands of dollars in penalties under §6707A of the Internal Revenue Code (“Code”) in an attempt to curb tax rejection shelters. This discretion can be applied regardless of the innocence of the taxpayer and was allowed by Congress.  It works so that if the IRS determines you have engaged in a listed transaction and unsuccessful to properly disclose it, you will be subject to a potentially draconian penalty regardless of any other facts and circumstances concerning the transaction. For some, this penalty has been assessed at nearly a million dollars and for many it is the beginning of a long nightmare.

The following is an example:  Pursuant to a settlement with the IRS, the 412(i) plan was converted into a traditional defined benefit plan.  All of the contributions to the 412(i) plan would have been allowable if they had initially adopted a traditional defined benefit plan.  Based on negotiations with the IRS agent, the audit of the plan resulted in no income and minimal excise taxes due.   This is because as a traditional defined benefit plan, the taxpayers could have contributed and deducted the same amount as a 412(i) plan.

Towards the end of the audit the business owner received a notice from the IRS.  The IRS assessed the client penalties under the §6707A of the Code in the amount of $900,000.00.  This penalty was assessed because the client allegedly participated in a listed transaction and allegedly unsuccessful to file the form 8886 in a timely manner.

The IRS might call you a material advisor and fine you $200,000.00. The IRS might fine your clients over a million dollars for being in a retirement plan, 419 plan, etc. As you read this article, hundreds of unfortunate people are having their lives ruined by these fines. You might need to take action immediately. The Internal Revenue Service stated it would extend until the end of March 1, 2010 a grace period allowed to small business owners for collection of certain tax-shelter penalties.

“Clearly, a number of taxpayers have been caught in a penalty regime that the legislation did not intend,” wrote Shulman. “I comprehend that Congress is still considering this issue, and that a bipartisan, bicameral, bill might be in the works.”  The issue relates to penalties for so-called listed transactions, the kinds of tax shelters the IRS has designated most egregious. A number of small business owners that purchased employee retirement plans so called 419 and 412(i) plans and others, that were listed by the IRS, and who are now covering hundreds and thousands in penalties, contend that the penalty amounts are unfair.

Leaders of tax-writing committees in the Home and Senate have stated they intend to pass legislation revising the penalty structure.

The IRS has suspended collection efforts in cases where the tax benefit derived from the listed transaction was less than $100,000 for individuals, or less than $200,000 for firms. They are still however sending out notices that they intend to fine.

Senator Ben Nelson (D-Nebraska) has sponsored legislation (S.765) to curtail the IRS and its nearly unlimited dominance and power under Code Section 6707A. The bill seeks to scale back the scope of the Section 6707A reportable/listed transaction nondisclosure penalty to a more reasonable level. The current law provides for penalties that are Draconian by nature and offer no flexibility to the IRS to reduce or abate the imposition of the 6707A penalty. This has served as a weapon of mass destruction for the IRS and has hit many small businesses and their owners with unconscionable results.

 

Internal Revenue Code 6707A was enacted as part of the American Jobs Creation Act on October 22, 2004. It imposes a strict liability penalty for any mortal that unsuccessful to disclose either a listed transaction or reportable transaction per apiece occurrence. Reportable transactions usually start within certain general types of transactions (e.g. confidential transactions, transactions with tax protection, certain loss generating transaction and transactions of interest arbitrarily so designated as by the IRS) that have the potential for tax avoidance. Listed transactions are specified transactions, which have been publicly designated by the IRS, including anything that is substantially similar to such a transaction (a phrase which is given very liberal construction by the IRS). There are currently 34 listed transactions, including certain retirement plans under Code section 412(i) and certain employee welfare benefit plans funded in part with life insurance under Code sections 419A(f)(5), 419(f)(6) and 419(e). Many of these plans were implemented by small business seeking to wage retirement income or health benefits to their employees.

Strict liability requires the IRS to impose the 6707A penalty regardless of innocence of a mortal (i.e. whether the mortal knew that the transaction needed to be reported or not or whether the mortal made a good establishment effort to report) or the level of the person’s reliance on professional advisors. A Section 6707A penalty is imposed when the transaction becomes a reportable/listed transaction. Therefore, a mortal has the burden to keep up to date on all transactions requiring disclosure by the IRS into perpetuity for transactions entered into the past.

Additionally, the 6707A penalty strictly penalizes nondisclosure irrespective of taxes owed. Accordingly, the penalty will be assessed even in legitimate tax planning situations when no additional tax is due but an IRS required filing was not properly and timely filed. It is worth noting that a unfortunate to disclose in the view of the IRS encompasses both a unfortunate to file the proper form as well as a unfortunate to include adequate information as to the nature and facts concerning the transaction. Hence, people might find themselves subject to the 6707A penalty if the IRS determines that a filing did not contain enough information on the transaction. A penalty is also imposed when a mortal does not file the required duplicate copy with a separate IRS office in addition to filing the required copy with the tax return. Lance Wallach Commentary. In our numerous talks with IRS, we were also told that improperly filling out the forms could nearly be as bad as not filing the forms. We have reviewed hundreds of forms for accountants, business owners and others. We have not yet seen a form that was properly filled in. We have been retained to correct many of these forms.

For more information see www.taxlibrary.us, or e-mail us at wallachinc@gmail.com.

The imposition of a 6707A penalty is not subject to judicial review regardless of whether the penalty is imposed for a listed or reportable transaction. Accordingly, the IRS’s determination is conclusive, binding and final. The next step from the IRS is sending your file to collection, where your assets might be forcibly taken, publicly recorded liens might be put against your property, and/or garnishment of your consequence or business profits might occur, amongst other measures.

The 6707A penalty amount for apiece listed transaction is generally $200,000 per year per apiece mortal that is not an individual and $100,000 per year per individual who unsuccessful to properly disclose apiece listed transaction. The 6707A penalty amount for apiece reportable transaction is generally $50,000 per year for apiece mortal that is not an individual and $10,000 per year per apiece individual who unsuccessful to properly disclose apiece reportable transaction. The IRS is indebted to impose the listed transaction penalty by law and can't remove the penalty by law. The IRS is indebted to impose the reportable transaction penalty by law, as well, but might remove the penalty when the IRS determines that removal of the penalty would promote compliance and support effective tax administration.

The 6707A penalty is particularly harmful in the small business context, where many business owners operate through an S corporation or limited liability company in order to wage liability endorsement to the owner/operators. Numerous cases are coming to light where the IRS is imposing a $200,000 penalty at the entity level and them imposing a $100,000 penalty per individual shareholder or member per year.

The individuals are generally left with one of two options:

Keep in mind, taxes do not need to be due nor does the transaction have to be proven illegal or illegitimate for this penalty to apply. The only proof required by the IRS is that the mortal did not properly and timely disclose a transaction that the IRS believes the mortal should have disclosed. It is important to note in this context that for non-disclosed listed transactions, the Statue of Limitations does not start until a proper disclosure is filed with the IRS.

Many practitioners believe the scope and dominance given to the IRS under 6707A, which grants the IRS to act as judge, jury and executioner, is unconstitutional. Numerous real life stories abound illustrating the punitive nature of the 6707A penalty and its application to small businesses and their owners. In one case, the IRS demanded that the business and its owner pay a 6707A total of $600,000 for his and his business’ participation in a Code section 412(i) plan. The actual taxes and interest on the transaction, assuming the IRS was correct in its determination that the tax benefits were not allowable, was $60,000. Regardless of the IRS’s eventual determination as to the legality of the underlying 412(i) transaction, the $600,000 was due as the IRS’s determination was final and absolute with respect to the 6707A penalty. Another case involved a taxpayer who was a dentist and his wife whom the IRS determined had engaged in a listed transaction with respect to a limited liability company. The IRS determined that the couple owed taxes on the transaction of $6,812, since the tax benefits of the transactions were not allowable. In addition, the IRS determined that the taxpayers owed a $1,200,000 section 6707A penalty for both their individual nondisclosure of the transaction along with the nondisclosure by the limited liability company.

Even the IRS organisation continue to question both the legality and the impartiality of the IRS’s imposition of 6707A penalties. An IRS appeals officer in an email to a senior attorney within the IRS wrote that “…I am both an attorney and CPA and in my 29 years with the IRS I have never {before} worked a case or issue that left me questioning whether in good conscience I could uphold the Government’s position even though it is supported by the language of the law.” The Taxpayers Advocate, an office within the IRS, even went so far as to publicly assert that the 6707A should be altered as it “raises significant Constitutional concerns, including doable violations of the Eighth Amendment’s prohibition against excessive government fines, and due process protection.”

Senate bill 765, the bill sponsored by Senator Nelson, seeks to alleviate some of above cited concerns. Specifically, the bill makes three major changes to the current version of Code section 6707A. The bill would grant an IRS imposed 6707A penalty for nondisclosure of a listed transaction to be rescinded if a taxpayer’s unfortunate to file was due to reasonable cause and not willful neglect. The bill would make a 6707A penalty proportional to an understatement of any tax due.

Accordingly, non-tax paying entities such as S corporations and limited liability companies would not be subject to a 6707A penalty (individuals, C corporations and certain trusts and estates would remain subject to the 6707A penalty).

There are a number of interesting points to note about this action:

1.     In the letter, the IRS acknowledges that, in certain cases, the penalty imposed by section 6707A for unfortunate to report participation in a “listed transaction” is disproportionate to the tax benefits obtained by the transaction.

2.     In the letter, the IRS states that it is taking this action because Congress has indicated its intention to amend the Code to alter the penalty provision, so that the penalty for unfortunate to disclose will be more in line with the tax benefits resulting from a listed transaction.

3.     The IRS will not suspend audits or collection efforts in appropriate cases.  It can't suspend imposition of the penalty, because, at least with respect to listed transactions, it does not have the discretion to not impose the penalty.  It is simply suspending collection efforts in cases where the tax benefits are below the penalty threshold in order to give Congress time to amend the penalty provision, as Congress has indicated to the IRS it intends to do.

4.          The legislation does not change the penalty viands for material advisors.

 

This is taken directly from the IRS website:

“Congress has enacted a series of income tax laws designed to halt the growth of abusive tax rejection transactions. These viands include the disclosure of reportable transactions. Each taxpayer that has participated in a reportable transaction and that is required to file a tax return must disclose information for apiece reportable transaction in which the taxpayer participates. Use Form 8886 to disclose information for apiece reportable transaction in which participation has occurred. Generally, Form 8886 must be attached to the tax return for apiece tax year in which participation in a reportable transaction has occurred. If a transaction is identified as a listed transaction or transaction of interest after the filing of a tax return (including amended returns), the transaction must be disclosed either within 90 days of the transaction being identified as a listed transaction or a transaction of interest or with the next filed return, depending on which version of the regulations is applicable.”

January 15, 2010: Brand New Update: The new proposed regulations specify a stipulation that reporting forms filed under 6707A filed late must have additional attachments. Where in is described many additional details not covered in the original regulations. In addition, various celebrations must sign a statement on the attachments under penalty of perjury. The proposed regulations also specify that the late filing must be done in a specific manner.  If this filing is not done according to these rules, the one-year period for statute of limitations will not commence, etc. In addition, the form should include a statement at the top in the manner the IRS suggests. If a tax payer fails to include, on any return or statement, for any taxable year, any information with respect to a listed transaction as defined in CODE SECTION 6707A, which is required to be included with such return or statement the time for assessment of any tax imposed by this title with respect to such transaction shall not expire before the date, which is one year after the early of; the date on which the secretary is furnished the information so required, or the date that a material advisor meets the stipulations relating to such transaction with respect to such tax  payer. As you know, Congress has armed the IRS with many weapons for enforcement. Usually there is three-year statute of limitations allowed to all taxpayers. In the situation above there will be no statute of limitations, unless the forms are filed in correctly with no errors at all.  In addition, the forms must be sent to the proper IRS authorities at their various locations. Lance Wallach’s commentary: It seems to me and to the only two people that I know who have been filing these forms correctly that that the IRS has purposely made it nearly impossible for accountants and tax attorneys to properly fill out these forms and to comply with regulations under SECTION 6707A. The result is that a business owner in one of these plans asks his accountant or attorney to file the disclosures. The Business Owner then gets fined, on average, ABOUT A MILLION DOLLARS. Or the Business Owner does not file the forms and gets the same fine. The same goes for the Material Advisor. The two people that have been filing these forms properly to my knowledge have repeatedly had discussions with the authors of these regulations and various other IRS personnel, including the Office of Tax Shelter Analysis.  Based on those many conversations with IRS personnel, repeatedly re-reading the various regulations and experience in filing many of the form under these code sections, these two people have developed their expertise. I only have their word that no one has been fined that they have helped. One of these individuals has been preparing the forms after the fact, late, for the last few years. I am not endorsing using anyone in particular for these forms. I am just writing about my experience in this area.

 

Lance Wallach, CLU, ChFC, talks and writes about benefit plans, tax reductions strategies, and financial plans. He has authored numerous books for the AICPA books, Bisk Total tapes, Wiley and others.

Lance Wallach, the National Society of Accountants Speaker of the Year also writes about retirement plans, 412(1) and 419 and Captive plans. He talks at more than ten conventions annually, writes for over fifty publications, is quotes regularly in the press and has written numerous best-selling AICPA books including Common Abusive Business Hot Spots. He does Expert Witness work and has never lost a case. Contact him at 516.938.5007, wallachinc@gmail.com, or visit www.taxlibrary.us.

 

The information provided herein is not intended as legal, accounting, financial or any other type of advice for any specific individual or other entity.  You should contact an appropriate professional for any such advice.

 

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