Wednesday, April 30, 2008

Five Ways to Spend Your Economic Stimulus Check

1. File Bankruptcy and Help The Economy

Since the purpose of the economic stimulus plan was to help Americans who were overburdened by high interest rates, credit card balances and sub-prime mortgages pay their bills, why not make this your last credit card payment. If you filed bankruptcy yourself, you could do it for less than $600. If you are married, you could hire an attorney to do it for you with your $1200 payment.

2. Buy a Wii Fit

According to their Website : “The active-play phenomenon started by Wii Sports now spreads to your whole body thanks to the pressure-sensitive Wii Balance Board (name not final), which comes packed with Wii Fit. The board is used for an extensive array of fun and dynamic activities, including aerobics, yoga, muscle stretches and games. Many of these activities focus towards providing a “core” workout, a popular exercise method that emphasizes slower, controlled motions. Family members will have fun staying active and talking about and comparing their results and progress on a new channel on the Wii Menu.”

3. Let The Government Buy Your Next Gun and Ammo

Citizens Committee For The Right to Keep and Bear Arms (CCRKBA) Chairman Alan Gottlieb thinks it would be a boon to America's firearms industry for that money to be spent on pursuits guaranteed by the Second Amendment, while also providing jobs and paychecks, and creating new jobs for people in the industry. "This is our money, anyway," Gottlieb said ofthe stimulus checks. "If we weren't paying it in taxes to begin with, it would still be in our bank accounts and wallets, and we would already be spending that cash on a new rifle or shotgun, perhaps a new handgun and ammunition, shooting accessories and other equipment. "Set some cash aside to buy gasoline for a trip to the range," he added, "and don't forget that with every firearm and ammunition purchase, Americans contribute to the Pittman-Robertson federal excise tax program that supportsstate wildlife agency programs, including hunter education. Not only will these purchases provide a much-needed boost to the gun industry, they allow gun owners an opportunity to take more than just a symbolic swipe at anti-gunners and anti-hunting groups."

4. Buy Fine Wine and Spirits

You can get a bottle of 1908 Bual Madeira for $534.00. Everyone should try a 100 year old wine at least once in their life. Or you could buy a 40 year old bottle of Old Fettercairn single malt scotch for around $700.

5. Go to The Ball-Park or Playoffs

Even though it is the regular season, you can easily spend $600 on baseball tickets. At Yankee Stadium, $600 buys one seat behind home plate. In Colorado, you could get a 25 game package for $625. If baseball is not your game check out the NHL or NBA Playoffs. According to, two nosebleed seats for the Lakers' next series cost about $600. The NHL is a better value, you can get 3 seats to the Red Wings' next series for $575.00.

The Economic Stimulus Check – When Will You Receive It?

According to, the economic stimulus checks, for tax returns filed by April 15, will be mailed according to the last two digits of your social security number. Here is the schedule:

Direct deposit payments
If the last two digits of your Social Security number are: Your stimulus payment should be sent to your bank account by:
00 - 20 May 2
21 - 75 May 9
76 - 99 May 16
Paper check
If the last two digits of your Social Security number are: Your check should be in the mail by:
00 - 09 May 16
10 - 18 May 23
19 - 25 May 30
26 - 38 June 6
39 - 51 June 13
52 - 63 June 20
64 - 75 June 27
76 - 87 July 4
88 - 99 July 11

Friday, April 25, 2008

US Treasury Department Identity Theft Video

Anatomy of a “Nigerian Letter” Scam Part

Here is a letter I received by email today. It is a variety of the “Nigerian Letter” or 419 Scam whereby identity thieves attempt to obtain information in order to commit identity theft or other crimes. I receive at least ten of these letters per week this is one of the better ones. The writer claims to be from Togo and at least names a real city in that country. I have reprinted the letter in full and the reasons why it is an obvious scam. When I receive their reply letter I will post it as well.

Dear Friend,

May the peace of our Lord be upon you and your family.

I crave your indulgence at this mail coming from somebody you have not know before. I decided to do this after praying over the situation. You should please consider the transaction on its content and not the fact that you have not known me before. I need not dwell on how I came by your contact information because there are many such possibilities these days.

I would like to introduce myself as Mrs. Charite Habibi, of Repulic of Togo, widow to Late Mr. Usman Habibi (former Consular of the Togo Embassy in Madrid - Spain ) .I have been recently been diagnosed of Cancer of the Pelvics.

I am writing from my sick bed. There is this US$10.5Million my husband deposited with my name in a bank, here in
Lome, Republic of Togo. With my health condition and because my husband and I have no children, I am looking for a credible person to whom I will pass the right of next of kin.This person will apply to the bank and request from them, the procedure towards retrieving the fund from them.This is on the condition that you will take 25% of the fund for yourself, 5% used for expenses, while you will use the remaining 70% for the less previlege people in the society. This is in fulfilment of the last request of my husband: that a substantial part of the fund be used to carter for the less previleged.

If this condition is acceptable to you, you should contact me immediately with your full names and contact information so that I will send you the document that the bank issued on my name when the funds was deposited. So that you will contact the bank directly, and demand from them the procedure towards the release of the fund to you from their bank. I cannot predict what will be my fate by the time you wll recieve the fund, but you should please ensure that the fund is used as I have described above.

I will be most grateful if you can come forward and help me so that I will give you more details and the contact details of an attorney I have told about the matter.

Please think about this project and give it a second thought before you Consider this and get back to me as soon as possible. Finally, it is my humble prayer that the information as contained herein be accorded the necessary attention, urgency as well as the secrecy it deserves.

I Expect your urgent response if you can handle this project. Email me back for more details.

Respectfully yours,

Mrs. Charite Habibi .

How do we know that this is a scam:

1. It is too good to be true. Wealthy people do not contact strangers offering to give them large sums of money for free. If a deal is too good to be true, rest assured that it is.

2. This email came from Why would a widow in Togo have an American Yahoo Account?

3. A Google search for “Usman Habibi” produced another copy of the same letter on a bulletin board on a French language website as a comment to an article about drinking bottled or tap water.

4. The same letter was posted on March 15, 2008 at by Mrs. Faith Ali. Who also clamed to be the widow of Usman Habibi. It is quite a coincidence that Mr. Habibi had two wives, left $10.5 Million to each, and that both of them developed “cancer of the pelvics”.

5. A search of the telephone directory in Madrid showed no listings for a Togo embassy in Madrid. In fact, Togo only has embassies in Brussels, Paris, Ottawa, and Washington DC.

It is important to note that these scammers use made up names when sending these letters. If Usman Habibi, Faith Ali or Charite Habibi even exist in all likelihood, they are also innocent victims of these con artists.

Friday, April 18, 2008

Highlights of the Proposed Credit Card Holders' Bill of Rights

Senator Robert Menendez (D-NJ) and Representative Carolyn Maloney (D-NY) have proposed sweeping legislation called “The Credit Cardholders' Bill of Rights” aimed at reforming credit card industry abuses and improving consumer protections.

Senator Menendez’ legislation is set forth in two bills, The Protection of Young Consumers Act and The Credit Card Reform Act. According to Senator Menendez’ website:

“The Protection of Young Consumers Act will protect people, especially college students and other young people, against skyrocketing consumer debt and the barrage of credit card solicitations that lead to it. The proposal will: 1) build on the current “opt-out” provision regarding pre-approved credit card offers by prohibiting credit card solicitations to consumers under 21 unless they proactively “opt-in” to receive such solicitations; and 2) establish a financial literacy and education program in elementary and secondary schools to help prepare young people to be financially responsible consumers.

The Credit Card Reform Act will also protect consumers against excessive fees and interest rates. It will: 1) prohibit “universal defaults” in which a credit card company imposes excessive increases in interest rates for events completely unrelated to the payment history on that account; 2) restrict excessive late fees; and 3) tighten regulations on credit card companies to ensure that they are not offering credit to high-risk cardholders without verifying their ability to pay.”

Representative Maloney’s Bill goes farther. It requires credit card issuers to provide 45 days notice of interest rate increases and allows them to cancel their accounts and pay the balances off at the prior interest rate for three billing cycles. It bans credit card company’s policies of “any-time, any reason” re-pricing of interest rates; prohibits “two-cycle billing”; and prohibits credit card companies from charging late fees whenever a card holder provides proof of having mailed their payment within 7 days of the due date.

Yesterday, representatives for credit card companies had a chance to testify, and said by basing rates on an individual's risk profile, they've been able to extend credit to more consumers. The proposed bill, they said, would jeopardize that. " You will indeed see two things happen -- an increased cost of credit and reduced access to credit to those people who need it most," said Carter Franke, marketing executive with JP Morgan Chase.

The Federal Reserve is also looking at industry practices and reviewing regulations that govern the credit card issuers. The fed is expected to impose new rules later this year.

Monday, April 14, 2008

New E-Book Explains IRS Settlement Procedures

Having tax problems can be a trying experience. I have just written a new e-book The Insider's Guide to Settling Your IRS Tax Debt. It explains the various ways that you can settle your debt to the Internal Revenue Service. It includes detailed step-by-step instructions and links to the correct IRS forms. Lots of companies, such as J.K. Harris and Company and American Tax Relief charge high fees for preparing these documents. You can do it yourself and save thousands of dollars in the process.

Wednesday, April 2, 2008

1000 Real Millionaires Reveal Their Top 13 Success Secrets

Lessons we all need to learn from and take to heart: 13 lessons from millionaires on how to achieve wealth. Like having a supportive spouse, finding good mentors and living below your means (huh?)

read more | digg story

Settling IRS Debts and your Home

QUESTION: Is it possible to settle tax debt to the IRS without giving up your home?ANSWER: You may establish various payment arrangements to pay your tax debt with the IRS. Regarding your residence, the IRS may not seize any real property used by you as a residence to satisfy a tax liability (including penalties and interest) of $5,000 or less

read more | digg story

Tuesday, April 1, 2008

What To Do if You Can't Pay Your Taxes -- Part 1

Here is information from Wikipedia concerning the IRS Offer In Compromise Program which lets people settle their past tax debt, sometimes for even less than the amount owed. In future posts, I will discuss other strategies for dealing with the IRS when you can't pay your taxes. I hope that you find it helpful.

The Offer in Compromise (or OIC) program, is an IRS program under 26 USC 7122 which allows qualified individuals with an unpaid taxdebt to negotiate a settled amount that is less than the total owed to clear the debt. A taxpayer uses the checklist in the Form 656, Offer in Compromise, package to determine if the taxpayer is eligible for the offer in compromise program. The objective of the OIC program is to accept a compromise when acceptance is in the best interests of both the taxpayer and the government and promotes voluntary compliance with all future payment and filing requirements.

Qualifying conditions

At least one of three conditions must be met to qualify a taxpayer for consideration of an OIC settlement:
• Doubt as to Liability — Debtor can show reason for doubt that the assessed tax liability is correct
• Doubt as to Collectibility — Debtor can show that the debt is likely uncollectable in full by the IRS under any circumstances
• Effective Tax Administration — Debtor does not contest liability or collectibility but can demonstrate extenuating or special circumstances that the collection of the debt would "create an economic hardship or would be unfair and inequitable." This Offer in Compromise program is mainly for elderly or disabled Taxpayers.

Doubt as to collectibility

Doubt as to collectibility means that the taxpayer will never be able to fully pay the tax bill. The IRS will accept a settlement based on the following formula:
Settlement Amount = 60 months of disposable income + the equity in all the taxpayer's assets. (48 in the case of offers paid within five months of acceptance.)
If a taxpayer believes he or she qualifies, the taxpayer completes a financial statement on a form provided by the Internal Revenue Service. An individual not engaged in business may use Form 433-A, and Form 433-B if engaged in business. These financial statements will allow the taxpayer to outline everything owned, and to create a monthly income and expense table.
Disposable income is monthly income minus monthly expenses. For the example given, assume that disposable income is $100. That amount is multiplied by 48 or 60 months, resulting in a product of $4,800 or $6,000. That is the tentative minimum offer.
Now the taxpayer must add the taxpayer's equity in assets. Assume that the taxpayer owns a house that is worth $200,000 and owes only owe $180,000. In this case the taxpayer has $20,000 in equity. This must also be added to your Offer. (This needs correcting. It should be 80% of value less liabilities.)
The total offer in this simplified situation would be $20,000 + $6,000, or $26,000. What's that you say? You don't owe that much? Then you are not a candidate for the Offer in Compromise program. But if you owe, say, $100,000 then this is a great deal.
However, as is usually the case, things are not this simple. If you can make a cash offer, that is pay what you offer in 90 days or less, than you use a factor of 48, not 60 months as indicated above. Therefore, the minimum amount of your offer based on your income would be $100 time 48, or $4,800.
Let's say that you also convince the IRS that your house could not be sold on the market that quickly or that there are other problems with a potential market sale. Then, you could ask for a discount to "Quick Sale Value," or QSV, instead of Fair Market Value, FMV. Your house in now valued at a discount to 80% of FMV, or $160,000. In the above example. Because your QSV is less than what you owe on the house, and assuming you have no other assets, your actual potentially acceptable offer is $4,800 plus $0, or just $4,800.

Now let's say that you cannot pay the $4,800 within 90 days. You could offer to pay the original $6,000 listed above within 24 months: for example, at the rate of $250 per month for 24 months.

If you cannot even do that, there is yet a third way to pay. You can offer to pay your monthly net income after allowable expenses (as determined by the IRS) over the life of the remaining statute on collection (originally 10 years). Lets say, you can pay $100 per month and there is 7 years (84 months) remaining on the statute. Then you will pay $100 per month for 7 years or $8,400.
If you owe more than $8,400 in tax, penalty and interest, and your offer is accepted, then you have a good deal. If you owe less, its not a good deal; in fact, it will not be an offer that the IRS will accept. You would be better off asking for an installment agreement at $100 a month until your account is satisfied.

Lowest acceptable offer

The above formula may be applicable in cases where you owe a very large sum and you have a significant amount of disposable income. However, "doubt as to collectibility" implies the inability to pay. The IRS has been known to accept offers in compromise as low as 10%, 1%, and $1 (One Dollar), but this is, as you can imagine, very rare.
If your disposable income is $0, you do not expect to have disposable income for some years, you have special circumstances, you have zero assets and if paying this debt would cause a hardship, the IRS has been known to accept ONE DOLLAR to settle your tax liability through the Offer In Compromise. Said provision takes effect 60 days after the signing.

In a recently accepted "Offer in Compromise" filed in 2006, a family experienced the disability of the primary wage-earner. The tax liability was incurred in 1994, and had been accruing interest and penalties (leading to thousands of dollars in tax liability.) The OIC form filed by the family included the required Form 433 Collection Information Statement and expense information (less than the accepted standard expense allowances for OIC formulation), as well as the fee waiver form that is applicable in low-income cases (this waives the otherwise required $150 OIC processing fee.) Because the family's expenses exceeded their income, the disability of the wage-earner and the lack of saleable assets, the IRS accepted their original offer of $1.

Recent tax legislation requires a taxpayer to make a 20% good faith payment with the offer-in-compromise. If the offer is rejected, the IRS can keep the 20% deposit.

Partial payment

Effective July 15, 2006 the IRS made changes to the Offer in Compromise program requiring that an up-front twenty percent, non-refundable payment plus $150 be submitted along with the Offer of Compromise. An Offer submitted without the fees is subject to rejections without appeal. After the IRS receives the Offer, the IRS has two years to make a decision. If the decision is not reached by that time, then the Offer is automatically accepted.

Under the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA 2005) if a taxpayer chooses to make payments over time, i.e. monthly, the taxpayer must include with the offer the first month's payment. The taxpayer is not required to submit the 20%, which applies only to the lump sum payment option. Then during the time that the offer is being considered by the IRS, the taxpayer must keep making the monthly payments to keep the offer current. If the taxpayer fails to make the payments, the offer will be returned to the taxpayer.

In the case of both the $150 application fee and either the 20% down payment or the monthly payments, a low income taxpayer may be exempt from both. The taxpayer should review the Form 656A to determine whether these fees and payments apply to them.
Effect of an Offer in Compromise on IRS levy or lien

An Offer in Compromise will have no effect upon a tax lien. The lien will remain in effect until the offer is accepted by the IRS and the full amount of the offer has been paid in full. Once the offered amount has been paid, the taxpayer should request that the IRS remove the lien. An offer in compromise will stop tax levies under section 301.7122(g)(1) of the US Federal Tax Regulations. That regulation states that the IRS will not levy upon a taxpayer's property while a valid offer in compromise is pending and, if rejected, for thirty days after the rejection. If the taxpayer appeals the rejection, the IRS cannot levy while the appeals process is ongoing.


The IRS issued a consumer alert for consumers to beware of promoters' claims to settle debts for "pennies on the dollar" through the OIC program. The warning addresses companies charging high fees to consumers who may not be eligible for the program; all other payment means would have to be exhausted, including installment payments. A recommendation is to check with the Better Business Bureau before contracting any firm to resolve your tax problems. Personal Finance News