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November 2008

Life can be funny. And sad. And infuriating. And just downright wrong. All of those apply to the financial situation of American International Group Inc., better known by its initials AIG. We're all too familiar with the recent $150 billion federal bailout of the insurance giant. After the money was forked over, the fun revelations started coming. We soon learned, but not soon enough, that the deal was structured to protect AIG's loan interest tax deduction. Well played, AIG tax attorneys. You obviously are much better than our government lawyers. Then came word of the AIG retreat. Apparently AIG execs... Read more →


Three years ago today, I posted my first item on Don't Mess With Taxes. I wasn't quite sure what I was doing, but I knew I wanted to start a dialog on money matters and mostly talk about my favorite topic of taxes. Since then, I've cranked out almost 1,700 posts and received nearly as many comments, not to mention gotten direct e-mails from readers worldwide about various tax and money issues. There have been a couple of design changes and countless widgets and electronic tchotchkes thrown up on the ol' (well, young) blog page. Some have worked out, some... Read more →


NOTE: This post was revised 11/20/08 to clarify the eligibility dates for available energy-efficient home improvement tax credits. Winter has already arrived in some parts of the country. Down here in Central Texas, we're expecting our first freeze this weekend. That means it's finally time to turn on the heater. Depending upon what type of heating system you have, it also will mean higher utility bills. We're pretty lucky here in the Austin area. Winters aren't that long or cold, so I've found that the hubby and I actually save a little money during this season. Plus, we have gas... Read more →


Yesterday, before I headed out to spend most of the day at meetings, I turned on the television to see how much money my investments were losing. Yeah, I always like to start my days on a happy note! If you've paid attention to market movement, you know I cringed when the cable station cut away for a press conference by U.S. Treasury Secretary Henry Paulson. Lately, every time Dubya or anyone from his Administration takes to the airwaves to make an official statement on the financial crisis, stocks tank. They did again yesterday. OK, maybe it's coincidental, but I... Read more →


Regular readers know that I love movies. One of the greatest things about being self-employed is the ability to head to the local theater and take in a weekday matinee. FYI, here in the greater Austin area, Tuesdays are free popcorn days for Regal Crown Club members. My affection for film means that every chance I get, I incorporate cinematic or film industry references in stories and blog items. Don't believe me? Just click here for the money and/or tax and movie connections so far in the ol' blog. Trust me. This category will grow. And today, ticket holders, I... Read more →


A couple of tax evasion cases involving famous folk have popped up today. First the case with the U.S. connection. The father of actress Michelle Williams has agreed to return to the United States to face tax evasion charges. Larry Williams, a prominent stock market trader, had been fighting extradition from Australia since he was arrested by police there in 2006 when he flew to Sydney for a speaking tour in Australia and New Zealand. The IRS wants to question the 65-year-old Virgin Islands resident, who has been free on bail, about a possible $1.5 million in unpaid taxes from... Read more →


On this Veterans Day 2008, our thoughts and prayers go out not just to those who previously served, but to all military personnel still in harm's way. Sometimes, though, a return home poses its own set of financial dangers. According to a survey from the Defense Manpower Data Center and reported by Military.com, 19 percent of junior enlisted members of the military failed to make minimum credit card payments and 11 percent have bounced checks. More distressing, the Defense Department says that military members use payday loans three times as often as civilians. That's not necessary, says the DoD. Army... Read more →


Closer look at bank bailout tax breaks

We Main Streeters must wait until next year for any potential relief from another stimulus package. Even then, as I blogged here, it's not going to be a stimulus rebate check along the lines of those issued in the first round of economy boosting efforts. But some big banks already are getting their tax bonuses, thanks to a Treasury rule Don't Mess With Taxes blogged about on Sept. 9 in the wake of the Fannie Mac/Freddie Mac rescue. Back then, we noted that Section 382 of the Internal Revenue Code says that net operating losses (NOLs) are limited when there... Read more →


Today was a great lazy Sunday. I didn't do any "real" work at all. Still, even in down time, it's hard to escape financial topics. That's what happened when I sat down tonight and actually read all of the New York Times magazine (and made a tentative attempt at the crossword puzzle). Two stories in the Sunday insert are definitely worth sharing. A closer look at check cashing services: Check Cashers, Redeemed looks at the success of Nix Check Cashing. Douglas McGray writes: Twenty or thirty years ago, traditional financial institutions fled neighborhoods like Watts, and guys like Tom Nix,... Read more →


Every tax season, my friend Tracy checks to see if by some miracle the tax dependent laws have changed. Tracy is mom to two cats and in her annual call she lets me know, in detail, why she should be able to claim the felines as dependents. I agree with her. Pets are part of the family and many are much more agreeable than human relatives. Alas, lawmakers and the IRS don't see it that way. That's not one of Tracy's "children" there at right. It's Paul Newman, the blue-eyed owner of another friend, Julie, who shares Tracy's tax time... Read more →


Hey Californians! The fun just keeps on coming for you guys. Fresh off of the Prop 8 same-sex marriage vote and its fallout (much citizen unrest, possible business implications and lawsuits in the works), you now get to deal with a special legislative session that might hike and expand your state sales taxes. If that happens, it'll likely cost you more to drown your higher tax woes, as Gov. Arnold Schwarzenegger also is calling for an increase in the alcohol excise tax. "I’m not a believer in taxes; I’m not a believer of increasing fees. It’s just under these circumstances... Read more →


President-elect Barack Obama held his first press conference as the incoming leader of the United States. According to the live blogging report from the L.A. Times Top of the Ticket, he very briefly, and vaguely, discussed the current economic crisis. He was equally noncommittal on tax specifics. "I think that the plan that we've put forward is the right one," Obama said. "But, obviously, over the next several weeks and months, we're going to be continuing to take a look at the data and see what's taking place in the economy as a whole." That's OK. Yes, promises were made,... Read more →


Tax-related ballot initiative results

Some Congressional seats are still up for grabs, but the results are in for the ballot questions put to voters on Tuesday. The biggie was in Massachusetts, where residents decided that the best way to keep paying for state services was to continue collecting the state's income tax. According to the National Conference of State Legislators, 2008 was a pretty normal year number-wise for citizen initiated ballot questions. There were 59 such measures. In addition, voters decided on 84 legislative referenda, two popular referenda and eight other ballot questions. Here are the results of the ballot measures I previewed before... Read more →


New stimulus plan: tax cuts, not rebates

A second stimulus package is in the planning stages, but don't get your hopes up for a second rebate check. House Speaker Nancy Pelosi told the Wall Street Journal today that her party, fresh from capturing the White House and adding to its numbers on Capitol Hill, is considering a two-staged effort to boost the shaky U.S. economy. The outlook right now is for a $60 billion to $100 billion stimulus package, followed early next year by a companion measure that would include a "permanent tax cut." Pelosi said any measure enacted in a lame-duck Congressional session this month would... Read more →


A few votes are still being counted, but for four members of the federal tax-writing committees, the news is not good. A senior Republican member of the House Ways and Means Committee and the newest GOP Senator on the Finance Committee both lost their reelection bids in yesterday's Democratic sweep of Washington, D.C. Phil English (R-Pa.) has served as ranking minority member on the Ways and Means Select Revenue Measures Subcommittee. He had been a member of Ways and Means since he took office in 1994. English lost to Democratic challenger Kathy Dahlkemper. Across Capitol Hill, Sen. John E. Sununu... Read more →


It's no secret that President-elect Barack Obama's tax plan calls for increased collections from individuals making more than $250,000 a year. Professional athletes are among those who, if this does indeed become law, will face higher tax bills. So some agents have already begun making tax plans that will protect their clients somewhat from a higher tax bracket. Under the Obama proposal, the highest tax rate would go from the current 35 percent back to the 39.6 percent level it held under the Bill Clinton administration. Money received in 2008, however, will likely be protected at the 35 percent level.... Read more →


It might sound like a companion game to Dungeons and Dragons (and yes, I realize that reference indicates my age and possibly some nerdiness!), but political and market observers say there's a definite connection between stock performance and the political party occupying the White House. Today, stocks rose in the biggest Election Day rally ever. Reuters reports that the rally pushed stocks to their highest close since Oct. 6, with the S&P 500 crossing the 1,000 mark for the first time since Oct. 13. Overall, the three major U.S. stock indexes all ended up around 18 percent from their Oct.... Read more →


Tomorrow is Election Day and, as usual, taxes have played a big part in the process. So it is only fitting that this 42nd Carnival of Taxes is our Election 2008 edition. But before you head into our tax blog voting booth, a few comments. First, we got lots of good submissions. But as happens with every Tax Carnival, many items weren't related to taxes. And some folks submitted multiple tax postings. Non-tax items weren't included. And where a blogger contributed more than one post, I chose a single item to represent the effusive poster. Some may call such decisions... Read more →


The presidential election clock is ticking down. You know what that means. We're running out of time to look at Joe the Plumber's tax bill! Last week, Samuel C. Thompson, Jr., professor of law at Penn State's Dickinson School of Law and founder and director of the university's Center for the Study of Mergers and Acquisitions, examined the potential taxes that Joe Wurzelbacher (aka Joe the Plumber) might pay if Sen. Barack Obama is elected and his tax plan is implemented as presented. As part of Penn State's "Election 2008: Issues Forum and Voters' Rights," Thompson presented Joe the Plumber... Read more →


Three guesses as to which group of taxpayers cheat on their taxes more and the first two don't count. Yep, the wealthy are more adept than the rest of us at hiding their income from the IRS. That's the considered opinion of Joel Slemrod, economics professor and director of the Office of Tax Policy Research at Ross School of Business, University of Michigan, and IRS researcher Andrew Johns. Their study, The Distribution of Income Tax Noncompliance, analyzes tax cheating by income group. Tax gap numbers crunched: Slemrod and Johns used unpublished data from special research audits the IRS conducted on... Read more →