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Showing posts from April, 2005

Senator Lautenberg's comments on Bankruptcy Law

April 26, 2005Mr. Ronald Cappuccio
Cherry Hill, NJ 08002Dear Ronald:Thank you for contacting me about bankruptcy reform. I appreciate hearing from you on this issue. In recent years, I have voiced support for a comprehensive review of our nation's bankruptcy laws. In my view, it’s imperative that any reform should provide a balanced approach to both sides of the problem: irresponsible debtors and irresponsible creditors. Unfortunately, the Senate recently acted only on the first of those problems, and the Republican majority struck down any attempt to focus on the latter. As you may know, the Senate passed S. 256, the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005", on March 10th, 2005. The House of Representatives recently passed this bill, and President Bush has signed it into law. The Senate had an opportunity to pass a good bankruptcy bill that would curb real abuses of bankruptcy while protecting consumers who fall on hard times because of …

Senator Lautenberg's comments on Bankruptcy Law

April 26, 2005Mr. Ronald Cappuccio
Cherry Hill, NJ 08002Dear Ronald:Thank you for contacting me about bankruptcy reform. I appreciate hearing from you on this issue. In recent years, I have voiced support for a comprehensive review of our nation's bankruptcy laws. In my view, it’s imperative that any reform should provide a balanced approach to both sides of the problem: irresponsible debtors and irresponsible creditors. Unfortunately, the Senate recently acted only on the first of those problems, and the Republican majority struck down any attempt to focus on the latter. As you may know, the Senate passed S. 256, the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005", on March 10th, 2005. The House of Representatives recently passed this bill, and President Bush has signed it into law. The Senate had an opportunity to pass a good bankruptcy bill that would curb real abuses of bankruptcy while protecting consumers who fall on hard times because of …

Congress Passes Credit Industry's Bankruptcy Bill

Credit Card Companies and abusive lenders such as rental centers got their wish; a new anti-consumer Bankruptcy Bill. Congress passed a bill forcing debtors to repay debts instead of getting them discharged. The bill also adds provisions requiring lawyers for debtors to independently investigate and certify the values of the debtor's assets. This will greatly increase the legal fees and costs for those least able to afford it. For the full article, click here.

IRS wants to stay in business.

Taxpayers spent more than $90 billion to comply with the tax code in 2002, according to preliminary estimates using IRS data presented on April 11 by Eric Toder of the Urban Institute in Washington. The figure considers the monetary burden of complying plus a monetized time burden of $20 an hour. Under those parameters, the average tax return costs $684, according to Toder, who spoke during a tax reform discussion at the Urban Institute. Both Toder and National Taxpayer Advocate Nina Olson stressed that while there are monetary and time burdens associated with filing tax returns, the “ritual” should not be abandoned for a returnless system.Taxpayers like to have the experience of looking at what their finances were for the year, Olson said. Once again, the government is trying to excuse taking your money and forcing you to spend inordinate amounts of time on tax compliance as being "good for you." Please see the complete article.

IRS Penalizes 20% of Business for Payroll Taxes

The IRS recently published filing and penalty statistics for FY2004. A whopping 6.4 million penalties were doled out on the 30.4 million employer withholding returns filed -- a rate of over 20%. A total of $2.47 billion in penalties was assessed. Over 90% of the companies that fall behind in their withholding taxes do so because of cash flow problems. They may not plan to do it ahead of time, but sometimes find themselves without the cash to make the payment on the day it is due. It may take the IRS a few months to realize a payment has been skipped, so at first it seems like easy money. But the penalties are stiff: 2% of the amount due for being just one day late, 5% for being 6 days late. If an employer files late there is a 5% per month (up tp 25%) penalty. Paying late can also add another 25% penalty, plus interest.

Creditors Barred from Bankrupt's IRA

In a unanimous decision, Rousey v. Jacoway, the Supreme Court held that creditors may not reach IRAs for petitioners who file bankruptcy. This means IRA's are treated the same as other pension type plans for Bankruptcy purposes. As a basis for its decision, the US Supreme Court relies upon the access restriction to IRA assets under federal law. Specifically, the Court looks at the 10 percent excise tax penalty for premature withdraws prior to age 59 1/2 to say that, while the assets in the IRA are vested, the penalty is sufficiently draconian that the full value of the assets contained in the IRA is only available "on account of age" so it is excludable from the bankruptcy estate under 11 USC 522(d)(10)(E).

Claiming a Parent as a Tax Dependent

If you are caring for your mother or father, you may be able to claim your parent as a dependent on your income taxes. This would allow you to get an exemption (currently $3,100) for him or her.

There are five tests to determine whether you can claim a parent as a dependent:

The person you are claiming as a dependent must be related to you. This shouldn’t be a problem if you are claiming a parent (in-laws are also allowed). Keep in mind, however, that foster parents do not count as a relative. To claim a foster parent, he or she must live with you for a year as a member of your household.

Your parent must be a citizen or resident of the United States or a resident of Canada or Mexico.

Your parent must not file a joint return. If your parent is married, he or she must file separately. There is an exception if your parent is filing jointly, but has no tax liability. If your parent files a joint tax return solely to get a refund, you can claim him or her as a dependent.

Your parent must …