Don't Mess With Taxes

The only thing worse than college course overload is the debt you went into to get into the university. Now, some students will be able to have some of their student loan amounts forgiven. (Photo by Pixabay) The Department of Education is now accepting online applications for full or partial discharge of student loans up to $20,000. It's a soft, beta launch, so be prepared to encounter some glitches if you're in a hurry to be done with your college debt. Technically, you'll be a test subject for the Education Department. The webpage notes: We're accepting applications to help us... Read more →

You've had that student loan for what seems like forever. So naturally, you're eager to take advantage of the debt forgiveness offered by the Biden Administration. But don't act too quickly or you could be a scam victim. Soon after President Joe Biden announced his plan that will erase in some cases up to $20,000 in undergraduate student loans, consumer advocates had some suggestions of their own. Beware of perps on the prowl with promises that they can get rid of your student loan obligation more quickly. Or get you even more loan relief if the federal plan doesn't cover... Read more →

College can be fun. Paying for it, not so much, especially when you have to take out loans. Some student borrowers are getting loan relief from the White House, but also might end up owing state taxes on their forgiven student debt. (Photo by cottonbro) Around 20 million folks who borrowed money to attend college got good news last week when President Joe Biden canceled a chunk of their student loan debt. The Biden plan's major component says that individuals earning less than $125,000 (or $250,000 for married couples or heads of households) a year will be eligible for up... Read more →

Some people. Trying to survive a global pandemic isn't enough for them. They have to go and break the law, too. I'm not talking about defying a state's closure order or hawking subpar face masks online. Nope, two New England businessmen this week became the first individuals to be arrested and charged with fraud in connection with the Paycheck Protection Program (PPP). The small business assistance program was created as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to help companies struggling due to the effects of the virus. David A. Staveley of Andover, Massachusetts, and David... Read more →

We're a third of the way to coronavirus relief checks. Last night (March 25), the Senate approved the massive measure, which includes in its 880 pages payments of $1,200 per person and $500 per dependent child. (More on this in a minute.) The bill, known as the Coronavirus Aid, Relief and Economic Security (CARES) Act, now goes to the House for approval. There may be some procedural stumbling blocks, but it's expected to pass there, probably by voice vote to avoid the congregating caused by a roll call on the chamber's floor. That probably will happen Friday. Then it heads... Read more →

Greece's future, both financially and as part of the Eurozone, remains unclear as the Mediterranean country and its creditors struggle to come to an agreement on what should be done about its persistent inability to pay its bills. UPDATE Monday, July 13, 2015: European leaders agree to tough Greek rescue plan. In simplest terms, the Greeks borrowed more money than they can pay back. The New York Times offers a more detailed look at how Greece got to this financial crisis point. At issue now is a three-year bailout of 53.5 billion euros, or $59 billion. It's not a new... Read more →

Debt is a terrible burden for many. Sometimes, though, erasure of the debt is not a good thing. That's the case for folks who, according to a story in today's New York Times, have received notification from banks that the lenders have forgiven the amounts the debtors owe. The problem is that in many cases the loans no longer exist. The owed amounts were already disposed of, in some cases through bankruptcy. The bank actions, however, now mean that the Internal Revenue Service will get notice that the former debtor has forgiven debt. Taxable forgiven debt. Forgiven debt generally is... Read more →

From the always entertaining "Mr. Kettle, meet Mr. Pot" file we have former IRS Commissioner Mark Everson pointing fingers at tax attorneys and accountants in connection with the 2008 financial industry meltdown. Everson, who headed the Internal Revenue Service from May 2003 until May 2007, played the blame game in a New York Times op-ed piece in which he longed for the days when Lawyers and Accountants Once Put Integrity First. "Lawyers and accountants who were once the proud pillars of our financial system have become the happy architects of its circumvention. Nowhere is this more the case than in... Read more →

It's been a week since we all learned about General Electric's innovation in the corporate tax realm. The company's vice president for communications and public affairs, Gary Sheffer, responded to the New York Times' story breaking the GE's tax saving situation via a letter in today's newspaper: "It was significant losses at GE Capital in the financial crisis, not 'tax avoidance' strategies, that reduced General Electric's 2010 overall tax rate below historic levels. Without these financial crisis losses at GE Capital, G.E.'s tax rate would have been near the average of other multinational corporations. Our tax rate will return to... Read more →

The Federal Reserve's interest rate policy is an invisible tax that costs savers and investors roughly $350 billion a year. This tax is stifling consumption and may be causing more economic problems than it's solving. That's the assessment of Todd E. Petzel, chief investment officer at Offit Capital Advisors, a private wealth management firm. "If we thought this zero-interest-rate policy was lowering people's credit card bills it would be one thing but it doesn't," Petzel told the New York Times. The cost to consumers doesn't stop there. Despite the low rate, banks don't seem to be increasing their lending. Savers... Read more →

There I said it! Despite the new edict from General Motors, I, a life-long Chevy owner, will continue to call my car and all others bearing the Bowtie logo, Chevies. In case you missed it, the new ad agency for General Motors says the company needs to present a consistent brand message by referring to the automobile make as Chevrolet, not Chevy. Big fat chance of that happening. As the story in today's New York Times notes, Chevy is ingrained in the American automotive consciousness, in part by previous acts (and ads) by the automaker itself. Then there's the music... Read more →

AIG has announced it is restructuring its incentive pay program. The insurance giant, which we taxpayers technically control thanks to our $90 billion investment, says it will use a a "forced distribution" system. Thousands of AIG employees now will be ranked on a scale of 1 to 4 based on their performance relative to their peers. Then their annual variable compensation, which may include bonuses, will be determined by their rank. Gone are the old retention awards that are based on just sticking around. Welcome to the brave new world of pay for performance. Under the plan, only 10 percent... Read more →

While Chrysler was in bailout talks with Uncle Sam, one of its top executives was dealing with his own financial problems. Jim Press, deputy chief executive of Chrysler Group LLC, owes $947,410 in back federal taxes and has defaulted on $609,286 he owes Western Federal Credit Union, according to the documents filed in Oakland County. The Wall Street Journal (via initial reports from the Detroit Free Press and the Detroit News) says IRS has filed a lien against Press' Birmingham, Mich., home. Another was placed on a townhouse he has n Manhattan's exclusive Lenox Hill neighborhood. Press and his wife... Read more →

Having trouble understanding exactly how all those banks and brokerages and various financial entities that crashed last fall are connected? Check out this diagram: Yeah, that's clear as mud. To me, the shape of the diagram looks sort of like a brain. And after staring at it, I'm reminded of that anti-drug television ad illustrating your brain after taking banned substances. That probably says more about my gray matter than the diagram. I know it definitely explains why I don't work in high finance. According to NPR's Planet Money, which alerted me and other @planetmoney Twitter followers to this funky... Read more →

Put away your torches and pitchforks. Your outrage, along with a proposed but not likely to be enacted 90 percent tax on AIG bonus payments, has done its job. It seem that the threat by Representatives to take back via taxes most of the AIG bonuses paid in federal bailout dollars was enough to get most of the insurance company's recipients to give the money back. That and New York Attorney General Andrew Cuomo's promise to name names of those who keep the money. I was as mad as anyone at AIG and its hubris and Capitol Hill and its... Read more →

Not to get your Friday off on an irritable start, but did you know that more than $221 million in taxes is overdue from 13 of the 23 largest recipients of Troubled Asset Relief Program (TARP) funds? That's the word from the House Ways and Means Subcommittee on Oversight, which held a hearing yesterday on the state of federal borrowing and the use of taxpayer money. The timing was perfect, given that the same day the full House approved a "clawback" measure to recoup most of the bailout money used by AIG as employee bonuses. The revelations from Lewis' subcommittee... Read more →

OK, I totally underestimated the appeal of using the tax code to recoup AIG bonus payments. Sorry, Charlie, for doubting you. Charlie is, of course, Charles Rangel, chairman of the House Ways and Means Commitee and chief sponsor of H.R. 1586, a bill that would tax up to 90 percent of bonus money paid to certain AIG employees. By a vote of 328-to-93, the measure passed the House. The Senate Finance Committee leaders are working on their own AIG bonus bill. It must pass that chamber and then the two pieces of legislation will have to be reconciled. It will... Read more →

Two days ago, the head of the House tax-writing committee spoke out against the idea of a specific tax on recipients of AIG bonuses. The tax code is "not a political weapon," said Rep. Charles Rangel (D-N.Y.). Today, Rangel has loaded his tax gun. He and his House colleagues are debating a bill, H.R. 1586, sponsored by the Ways and Means chairman which would take 90 percent of the AIG bonuses back in federal taxes. It would apply to bonuses paid since Jan. 1 by the federally rescued insurance giant or any other company accepting more than $5 billion in... Read more →

That's the message from President Obama, who has instructed Treasury Secretary Timothy Geithner to "pursue every legal avenue" to block $165 million in bonuses that the bailed out insurer plans to pay executives who were in part responsible for the company's near collapse. The attempt by the Administration to rein in AIG comes after the avalanche of outrage from lawmakers and the general public (waving hand wildly!) over the company's latest brazen example of fiscal excess. Public anger was further fueled by AIG's revelations of the names of dozens of big banks it has paid off with the bailout money.... Read more →

If you find my headline offensive, I apologize. But it accurately reflects just how offensive I find the latest actions of AIG. The insurance giant is totally shameless. Since we, the taxpayers, bailed out AIG last year -- without, I must add, being specifically asked whether we wanted to do so -- our stake in the company has risen to $170 billion. And what has the firm done with our generosity? Used our money and abused our trust. Now we learn that AIG is giving $450 million in bonuses to employees. Even more infuriating, these aren't just any employees. They... Read more →