The IRS is trying to give away more than $150 million

What? The Internal Revenue Service wants to give away money? Well, sort of. For tax year 2010, about 100,000

Dollar bills

Photo: 401kcalculator.org

taxpayers screwed up the mailing addresses on their tax returns. As of last summer, the Treasury Department had about $153 million lying about that should be refunded. That adds up to about $1,530 per return.You can check out whether you are entitled to a refund at www.irs.gov or call 800 829-1954.Good luck. And let us know if you are a “winner.”***********************The Consumer Gal and I just had our book, Enough of Us – which deals with other subject matter – published. Now we have to focus on marketing our “baby.” So for thetime being, I will be suspending my semi-monthly Consumer Guy full-length blog posts and, instead, providing  brief consumer tips..

If you would like to learn more about our book, which deals with issues of ethics and procreation, please visit our other website, www.enoughof.us. Many thanks for your interest.

Student debt, costly education, and lots of students – California may be creating yet another model for the nation

We recently learned that student debt in the United States has surpassed $1 trillion. What is a trillion anyway? Well, if you don’t know, it’s the same as a million people each owing a million dollars; or a billion people each owing a thousand bucks. In short, the people who owe this enormous sum are folks who attended an institution of “higher learning” (more on the quotes in a moment) and are now stuck with the bill.

How did this happen? In my other blog – which I co-author with the Consumer Gal (Cheryl Levinosn) we have discussed one major reason in our posts as well as in our book Enough of Us. If parents have kids and hope that their kids will one day go to college, they have to start planning for that eventuality. It makes our blood boil when parents of modest means don’t scrimp and save from the moment they become aware of the pregnancy. No smart phones, cable TV, or expensive gadgets. Forget the plans for upscale vacations or cars for the teens. That money belongs to the college-bound.

We live in the Bay Area; San Jose, to be exact. While the state is in terrible financial condition, it’s still a great place to live (ah, the weather!) But many educators, experts, and general Golden State residents worry about the future of California’s two great state university systems.

The education powers-that-be, including the governor and state legislature, are working desperately on higher education problems. The Cal Grant program helps low- and middle-income students pay for college. The state has formulated performance standards by which schools are eligible to receive funds that have been borrowed by students only if a quarter of students they graduate are able to pay off their loans in a reasonable amount of time.  This standard is an indicator that the schools are graduating young adults with usable skills that lead to jobs.

Unfortunately, not all so-called institutions of higher learning are what they purport to be. There is a spate of schools that promise advanced education and good jobs in fields where openings go begging. They advertise heavily on the Internet and TV. The problem is that they frequently draw their potential students from families that can’t afford to pay the tuition. Those students usually have to borrow from a variety of government sponsored sources. According to California Assemblymember Bob Wieckowski, about 90 percent of these schools’ funding come from Stafford Loans, Pell Grants, G.I. Bill Grants, and the state’s Cal Grants.

University of Phoenix Spokane Campus

California Assemblymember Bob Wieckowski

          The companies that run these schools netted $3.5 billion in 2009 and paid executive salaries of $41 million. Wall Street ain’t the only place where the governments get played for suckers. So while the execs rake in the bucks, most of the students gain few useful skills, have trouble – if any luck at all – finding relevant jobs, and are now burdened with heavy debt. As Wieckowski puts it, “We can’t continue to shovel taxpayer money into shareholder pockets, instead of adequately preparing students for their careers.”

          When Assemblyman Wieckowski introduced legislation this year requiring the schools to meet more stringent criteria in order to receive state grants,  the schools stepped up their lobbying efforts and managed to kill the bill in committee. The legislature never even got to vote on it. However, a coalition of reformers was able to make reforms in the budget process by cutting grants for high-priced schools, raised graduation-rate requirements, “and cracked down on schools with high loan default rates.”

In the meantime, both California State University and University of California systems, as well as the state’s community colleges, need more bucks. Perhaps with the reforms, there will be more state and federal financial benefits available.

This brings us back to the opening dilemma. Why aren’t parents providing for their kids’ higher education? If it’s because they can’t afford the costs, how can they afford the kids? This raises questions like:

  • Did they have more children than they could provide for?
  • Did they overspend on indulgences while the kids were growing up?
  • Would it be more realistic for their kids to attend junior colleges and after graduating look for higher education opportunities?
  • Should the kids work part time to help foot the bill while attending school?

And finally, when people who can afford to pay their share of taxes get significant tax deduction and a free K-12 scholarship for each kid, are we encouraging a system that is forever going to have trouble funding higher education. We go into this in some detail in Enough of Us. We need to consider whether or not we can afford to lower taxes for those families that will be asking the most help funding their children’s higher education.

Think about it and weigh in with your opinion.

Here Come the Tax Scams

It’s that time of year again. No, I am not referring to George Washington’s birthday. Nor those of Drew Barrymore, Vijay Singh, Dr. J, Ted Kennedy, or Lord Baden-Powell (dudes . . . he founded the Boy Scouts!). It’s time to prep your bits of paper and checkbook registers for your tax returns. Each year the Internal Revenue Service does us all a favor by offering a dirty duodeciscam (as in a dozen scams) list. “Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen. Scam artists will tempt people in person, on line and by email with misleading promises, about lost and free money. Don’t be fooled by these scams,” Says IRS Commissioner Doug Shulman.

1) Identity theft: If you suspect that your identity has been stolen, notify the IRS Identity Protection Specialized Unit at www.IRS.gov/identitytheft.  If you do so in time you might prevent a rogue from reaping a refund in your name, even if you do not have a refund coming.

2) Phishing. As many of you know, this is not a typo. And it is not related to Price-Pfister, the faucet company. It’s a solicitation that looks exactly like an official email from a government agency or a legitimate company with which you might have done business. The phishing email asks for personal information about you and various account numbers. If you receive an email that appears to be from the IRS and asks you for any personal information, do not respond. Instead, forward it to phishing@irs.gov. It’s a good idea to not provide such information to any business that asks for it in an email.

3) Illegitimate Tax Preparers. If you use a professional to prepare your taxes, check that person or business out before hiring. As the IRS puts it: “Questionable tax preparers have been known to skim off their clients’ refunds, charge inflated fees, and attract new clients by promising guaranteed or inflated refunds . . . In 2012 every paid preparer needs to have a Preparer Tax Identification Number and enter it  on the returns he or she prepares.” Here are some indications that preparers may not be on the up and up: They don’t sign the return or include their tax preparer number; Failure to give you a copy of your return; Promise of a larger-than-expected refund; Charges you a percentage of your refund as a fee; Asks you to split the refund; Adds forms to the return that you never filed before even though your status has not changed; They encourage you to place false information on your return.

4) Hiding Income Offshore. This usually applies to taxpayers (or cheats) with substantial resources. Many people have evaded taxes by hiding income in foreign banks, brokerage accounts and other schemes including foreign trusts, employee-leasing schemes, annuities or insurance plans. Now we all love the IRS, so we’re happy that they have lots of investigators who pursue taxpayers with undeclared accounts, as well as the enablers who assist them in their nefarious undertakings. If you have such offshore holdings, you are required to report the. If you don’t and you get caught, you will most likely have to pay through the nose or some other orifice.

5) Free Money From the IRS. Come on, what other kind of money can be given away? Money that you have to pay for? Scammer have been circulating flyers at community churches or spreading word among low-income people and the elderly. Here’s how the scam works. They let folks know that the government has a money giveaway program. All you have to do is apply. They charge the dupe a fee, help them fill out a form and then disappear. One of the scams involves having the victim apply for a Social Security refund that doesn’t exist.

6) False Income and Expenses. This is a really good way to be called in for an audit. I went through a small such audit a long time ago. I ended up owing nothing but it was a pain in the neck and several other body parts. And if you owe money as a result you will be very, very unhappy. This scam works thus: You claim more income than you actually made and then make false claims about your expenses in order to maximize refundable credits and then get an increased refund. In addition, says the IRS, some taxpayers are filing excessive claims for the fuel tax credit. Doing so could result in having to repay the refunds plus interest plus penalties. Good luck with that.

7) False Form 1099 Refund .Truthfully, I don’t quite understand this. But if you are thinking of filing a false information return like a 1099 Original Issue Discount (OID) to justify a false refund claim, don’t do it.

8) Frivolous Agreements. “Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying taxes they owe. The IRS has a list of frivolous tax arguments that taxpayers should avoid.” They have been thrown out of court, so don’t bother.

9) Falsely Claiming Zero Wages. Typically, a filer submits a Form 4852 or a “corrected” Form 1099 that reduces income to zero, sometimes submitting statutory language as an explanation as to why the filer does not consider certain income as wages. Sometimes they blame a paying company for not issuing a corrected 1099. In addition to other penalties there is a $5,000 penalty.

10)  Abuse of Charitable Organizations and Deductions. In a nutshell, here’s what not to do. Don’t claim deductions for contribution to charities over assets that you still control or from which you still make income. Don’t overvalue non-cash assets that you donate. If you donate non-cash assets, make sure you are not claiming the value on one set of donated items that other entities are also claiming.

11) Disguised corporate ownership. In this scheme, third parties request employer identification numbers and form corporations that obscure the true ownership of a business. Then they underreport income, claim fictitious deductions, avoid filing tax returns and pull off all sorts of other scams, like money laundering. The IRS is now working with state authorities to identify such cons.

12)  Misuse of Trusts. Trusts serve all kinds of use purposes, including some that legitimately aid folks in reducing tax burdens. But – and here comes my big but – the IRS has seen an increase in the use of trusts like private annuity trusts and foreign trusts in order to shift income and deduct personal expenses. If you are planning to use a trust, seek the help of a legitimate attorney who specializes in such vehicles and include advice from a financial professional as well.

 

Why I’m not Shopping at Amazon (& O.co) and why you Might Give This Some Thought

by Orin U. Unphare – Guest blogger

Why is Amazon.com smiling?

First, let me lay it all out. This is not my real name. I am using a pseudonym because I fear retaliation from Amazon. Why? Well, first, as far as companies go, it is an AMAZON. Second, it is known for retaliating, which is why I’m walking away to begin with.

            To be honest, I got fed up with Amazon a while back when I discovered it sells fur. Fur is a needless product that involves the tormenting and killing of animals. Amazon sells fox, raccoon and rabbit fur.

But now Amazon is retaliating against the State of California because the Golden State feels it’s unfair to sell stuff to  people here without collecting sales tax, the same sales tax that every business in the state must pass on to the government. It seems that our state throws money around for crap like schools, hospitals, roads, cops, firefighters, mental health and junk like that. How arrogant.

  Internet-based retailers already have a pricing advantage over brick and mortar stores because they don’t have to . . . well . . . have brick and mortar stores. No buildings, no land, no sales clerks, no business taxes, no property taxes, yada yada. But with most California communities charging taxes of more than eight percent in order to pay local and state bills, Amazon and other Internet retailers can undercut local business even more by saving their California customers eight-plus percent. As Bill Dombrowski of the California Retailers Association puts it, “This is nothing more than some companies trying to get a competitive advantage though a tax loophole, and now we have closed it.”

            So Amazon and Overstock.com (now going by the sobriquet O.co; I guess the J-Lo and A-Rod thing has spilled over into the Internet retail arena) feel they don’t have local retailers tightly enough by their cojones, so they have decided to get even with California.

Overstocked or undertaxed?

            How? As you may know, these retailers often do business with affiliated retailers all over the country. Since Amazon and O (not to be confused with Oprah  whatsername’s magazine) and other Internet businesses that meet certain criteria and that are affiliated with businesses in California, they must turn the sales tax over to the state. Instead, Amazon and O have opted to sever all relations with their California affiliates. In other words, they have found another way to screw greedy California, which is laying off more public employees than it can count.

            Well I have had enough. And this isn’t easy for me. I have bought some stuff at O.co for a fraction of what it would have cost me locally. I did that because there are some items that sell for outrageously inflated prices at retail locally. But that is fair competition.

            Now you may say, “Why should I give a rodent’s behind about California’s problems?” How’s this for an answer: According to the June 30, 2011 San Jose Mercury News, Amazon has pulled the same maneuver in Illinois, Arkansas and Connecticut, cutting out its local affiliates in those states. It is also suing New York State over similar legislation. U.S. Supreme Court, here we come! And with the current “Big Business Rules!” court, I wish all these states good luck. You’ll need it.

            As for me, taxes are what pay for essential government services. So if the big Internet boys won’t play – make that “pay” – fair, they can shove their businesses up their assets. I’m shopping elsewhere.

            Give this some thought. Your state may be next. And your local mom-and-pop may be steamrolled out of business.

Some Cool Consumer Tips

            I l-o-o-o-ve when I run across cool stuff for consumers. Here are four new factoids that might help – or at least interest – you. 

1 – You know those nutrition labels on packaged foods that tell you about calories, fat, saturated fat, sodium, and the like? Well I think they Typical Nutrition Facts lbelare great. Better than great. They’re Gre-e-a-a-t! (I’m not sure if Tony the Tiger spells it that way). I check out what I buy to put into my body. And while I do not eat meat for a variety of reasons, here’s some good news for those who do. Starting January 1, 2012, raw meat and poultry will be required to come with nutrition labels; at least the most common cuts and ground meats will. If this is stuff you’re cut out for, check out the regulations at http://www.fsis.usda.gov/OPPDE/rdad/FRPubs/98-005P.htm.

  1. 2 – If you have purchased HDMI cables for your cool electronic equipment (or, as I like to call it, all that electronic junk that we think will make us happier but just drains our savings and makes our retirements that much more bleak) like flat screen TVs Blue Ray players and the like, you know how damned expensive they can be. I have seen them ranging in price from 15 to 40 bucks. It’s a damned cable for Pete’s sake, not that I even know who Pete is. So I did some fishing (not “phishing” or phooling around). And voila, I found a pair of six-phoot cables for less than six bucks, including shipping! There they were on display at Overstock.com, which I now believe is simply O.co (great, another thing to remind me of Oprah Winfrey). So you can spend less than three smackers for each cable (in a pair) or you can get them in a fancy box for 10 times the price. My 3-buck cables work great, thank you very much.

3 – Have you ever checked out government web sites for money that may be owed to you? If your answer is “no,” what are you waiting for? Most states hold money that is coming to folks for a variety of reasons. The most common types of unclaimed property are:

  • Bank accounts and safe deposit box contents
  • Stocks, mutual funds, bonds, and dividends
  • Uncashed cashier’s checks or money orders
  • Certificates of deposit
  • Matured or terminated insurance policies
  • Estates
  • Mineral interests and royalty payments, trust funds, and escrow accounts.

California’s unclaimed property URL is http://www.sco.ca.gov/upd.html. I once found that the Consumer Gal had a modest amount of dough coming her way. Do an online search for your state. In addition, the IRS has nearly $165 million in unclaimed refund checks lying around somewhere. There are 112,000 taxpayers who have not received their 2009 refunds due to mailing address errors. So think back . . . “Hmm, did I ever get that refund from last year? . . .Doh!” If you are missing one, update your address at www.IRS.gov.

4 – Have you ever gone to an emergency room only to discover that the staff thinks that 27 other people’s emergencies are more emergent than yours? So you sit around for hours until you forget why you are there. Well, guess what. A lot of hospitals are okay with you going somewhere where the wait time is shorter. To find out a hospital’s wait time, check its web site or call the hospital. If you have a life-threatening emergency, make the call on your way to the hospital of first choice, providing you are not the one driving. Better yet, first call for an ambulance, then start calling or surfing for emergency rooms.

Money Saving Tips – and What to do With That Tax Refund

 

Looking for ways to spend that tax refund? Whoa! Not so fast.

If you’re not saving money each month, here are some things to consider in order to stash some cash..

1. If you carry a balance on your credit card accounts, use that 600 or 1200 bucks to get rid of it. The monthly interest – and any late fees – is costing you a fortune. You’re giving your money away!

2. Cut back on air conditioning. First thing in the morning, open up your doors and windows and turn on a fan. Cool the house down then close it up, including shades and blinds. Let nature cool the place for free. A whole house fan can cool your home at night or in the morning in just 15 to 20 minutes.

Restaurants

3. Brown-bag it to lunch. A piece of fresh fruit makes a healthful dessert.

4. If you must eat out, get the larger sandwich at places like Subway. Have half the sandwich today and half tomorrow. For an extra buck and a half you get two lunches.

5. You’ll be paying at least three times as much for a restaurant meal as for one made at home. But if you must eat out, try these money savers:

A. If dining as a couple, order one appetizer and an entrée and split them.

B. Restaurants make their biggest profits on drinks and desserts. Order tap water (or iced tea if you must – it’s usually refillable, but ask first). Why order a $6 or $9 glass of wine? At Trader Joe’s I can get three bottles of decent wine for 9 bucks.

C. Stop at the market on the way home and get a half-gallon of ice cream or frozen yogurt for less than the price of dessert at most restaurants.

D. Before you order a “special” that’s not on the menu, ask the price.

6. Don’t be embarrassed about looking cheap in front of your friends. Affirm that you are a cheapskate and let them be envious of your self-confidence.

Discount and big box stores
7. Buy vitamins and minerals at places like Trader Joe’s or Costco. You’ll save a bundle buying store brands or specials.

8. If big box stores sell in quantities that are too large for you, ask your neighbors if they would like split a case of mangos and a twin pack of dishwasher detergent with you.

Entertainment

9. If you must have cable TV, drop the premium packages that cost so much extra. If you can’t be entertained with a mere 100 channels, you’re watching too much TV.

10. Shop around for lower cost TV/Internet/and-maybe-phone packages. But be careful about packages that save money for a limited time only.

11. Shop around for insurance. This can save hundreds a year. Comparison shop on Internet sites and find out what’s available, especially if you combine auto and home insurance.

12. Raise the deductibles on your insurance. You don’t need to insure for small damage claims. Insurers could raise your rates if you make such claim.

13. If you go to the movies a lot, how about waiting six months longer for those new blockbusters and renting from Netflix or Blockbuster.com? You can get four movies a month for less than 10 bucks.

14. Get DVDs from the library.

Auto Savings

13. Drive slower. You’ll use more time but less gas. And cut your engine when waiting at a light during the daytime, if you're expecting to idle for more than a minute.

14. Unless you do a lot of desert driving, you don’t need to change your oil and filter every 3,000 miles. Check your owner’s manual.

15. If your car uses premium gasoline, try switching down a grade. If it doesn’t ping, you’re good. And you’ll save 10 cents per gallon.

16. If you need a new car, think twice. A two-year-old car under warranty can save you a bundle. Just be sure you have it checked out before you buy. Check Carfax.com and take it to a reputable diagnostic repair place.

17. If you don't need your cell phone except for urgent situations, switch to a pay-as-you-go service like T-Mobile To Go. I spend about 8 dollars a month on cellular service.

18. Use a discount long distance service such as ECG for your home phone. You can pay less than 3 cents per minute for interstate calls and 4 cents in-state.

Ellis Levinson has made a career of helping consumers with their complaints against businesses that don't meet customers' expectations. Your business might be employing money-saving strategies in the short run while alienating customers day after day.