Unconditional Offer On Extension Of Payroll Tax Cuts Made

On Monday the leadership of the House GOP said it planned to support a payroll tax cut extension through the end of this year. It would support the payroll tax cut without adding unrelated policies or making offsetting cuts. It is a surprising turn of events. Congress could pass a bipartisan proposal related to 2012 taxes well before deadline and without a huge debate about who pays what when. A compromise related to cuts in 2012 taxes is surprising.

This doesn’t mean that Republicans and Democrats are thrilled with each other when it comes to payroll tax cuts. Speaker of the House John Boehner, majority leader Eric Cantor and Kevin McCarthy, whip, read a statement together. The statement said that because an agreement hadn’t been reached, they decided to put into place a backup plan that extends payroll tax cuts through 2012. This will affect 2012 taxes. With the backup plan in place, negotiations on offsets and unemployment insurance will continue. The statements said that a measure for House consideration could be scheduled.

Despite Republican leadership support, the payroll tax cuts is not set in stone. Republicans might not have the support of conservatives in their party, Blue Dog Democrats could pull their support, and Democrats might not want the payroll tax cuts separated from unemployment insurance. Even though this is still not a done deal and may not affect 2012 taxes, it is remarkable that an unconditional tax holiday was passed by the House GOP. It has been a while since anyone in the government has used the word unconditional and meant it.

Romney Has Investments Funds In Cayman Islands

Romney Has Big Stash in Cayman Islands

It might not be immediately obvious, but Mitt Romney has millions of his fortune in investments funds in the Cayman islands, an infamous tax refuge.

A representative for Romney says he obeys the law, and that he pays the normal taxes despite where his money is.

As Republican nominations get closer, Romney is finding it harder to keep the secrets about his wealth under wraps.

Jack Blum, a lawyer from Washington thinks Romeny’s financial situation is a disgrace to the United States tax system.

Romney recently let out that he has been paying only 15% in taxes, much less than most of us. He stated privacy as the reason for wanting to keep this information separate, but all potential presidential candidates have to expect people to look into their financial affairs.

Romney is not hurting for money. His fortune is estimated at 250 million, and he pays lower income taxes on his investments in the Cayman Islands.

Blum says channeling money through offshore accounts lets investors avoid many small fees and traps that they would pay if the same money was on US soil. The primary reason for having funds in that location is avoiding taxes.

It may not be illegal, but it looks bad to some people, and the tax havens like the Cayman Islands cause the US government to lose out on $100 billion in revenue every year. Considering his timing, Romney may be wishing his investment funds were somewhere else less suspicious right now.

Tax Carnival Ecstasy – December 6, 2011

Welcome to the December 6, 2011 edition of Tax Carnival Ecstasy. In this edition we have a couple great stories including Beth Montgomery looking at Saving for Retirement and Kristine McKinley who expects Congress to Extend the Payroll Tax Holiday into 2012. Hope you enjoy all the articles, bookmark, share, tweet, like on Facebook and come back soon.

Ralph Ferro presents American Airlines Parent Company Files for Chapter 11 Bankruptcy posted at Bankruptcy Attorney NJ RSS Feed, saying, “Another day and another bankruptcy; this time financial troubles fly high as AMR Corporation (parent company to American Airlines) files for Chapter 11 bankruptcy. The move to file this type of bankruptcy will help the company restructure its debt. ”

tax law

Tyler presents What is the crash tax? posted at Auto Insurance, saying, “I hope you find this article fitting for your readers! Your readers may not have heard of the crash tax! Please let me know if you have any questions or concerns. Look forward to seeing this on your next blog carnival! Have a great day! Tyler”

Beth Montgomery presents Saving for Retirement posted at Credit Cards for Fair Credit, saying, “When you’re just starting your career, it is hard to think about retirement because it feels so far away, but in reality, putting money away when you are young will help you save more in the long run.”

taxes

Jessica Bird presents How Much Tax Do You Pay On Gas? posted at CarTaxBands.org, saying, “Do you think you spend a lot on gas? You should compare people in the UK pay. This blog post looks at the cost of gas in the UK and why it is so expensive.”

Amy Gardner presents Hidden Terms to Watch Out For in Payday Loan Contracts posted at Comments on: Disaster Strikes: 3 Real-Life Stories of People Crushed By Payday Loan Debt, saying, “In many contract agreements with payday lenders, not all of the terms and conditions of the loan are clearly stated.”

Kristine McKinley presents Congress Expected to Extend Payroll Tax Holiday into 2012 posted at Social Security Retirement Income, saying, “In 2010, Congress passed a payroll tax holiday which reduced the amount of Social Security tax paid by employees by 2%. This 2% payroll tax reduction was created to help boost the economy and was intended to be for 2011 only. However, since the economy has grown slower than expected in 2011, President Obama is calling for the tax cut to be extended into 2012.”

tips

Al Peters presents How You Get A National Insurance Number posted at TaxFix Feed Update, saying, “If you need to claim benefits you will need to apply for a national insurance number. This articles explains how to apply for your NI number.”

That concludes this edition. Submit your blog article to the next edition of tax carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.


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Tax debt reduction: Offers in Compromise explained

turbotax

There are many different types of debts that people are struggling with these days and for some people it is their tax debt that is causing them a huge problem. Whilst the Internet Revenue Service does, of course, expect people to pay the taxes that they owe, but in some cases an exception may be made and the tax debt may be reduced through the use of an Offer in Compromise.

If the IRS has reason to believe that there is little to no chance of being able to receive the total amount of the tax debt that you owe, or maybe there is dispute over whether someone is definitely liable for any tax debt that they are in, the IRS may – at its discretion – accept the submission of an Offer in Compromise. This is where you basically make an offer to the IRS, which would see you paying less than the amount that you owe.

The reason why the IRS is sometimes willing to accept an Offer in Compromise is because it means that it will at least be able to recoup some of the debt owed whereas without the Offer in Compromise the IRS risks losing out on the whole tax debt.

If you do enter into an Offer in Compromise with the IRS you have to make sure that you adhere to the terms and conditions of the contract, which you will have to agree to as part of the submission process. Form 656, or the Offer in Compromise, needs to be completed in addition to Form 433-A, which is the Collection Information Statement. Form 433-A Worksheet is also used when calculating the amount that you offer to pay to the IRS as part of the Offer in Compromise.

As part of any Offer in Compromise you will be agreeing to a number of things, which includes:

  • You will pay the sum of money that has been offered as part of the Offer in Compromise
  • For the next five years you will make sure that you both file your tax returns regularly and on time and that you pay your tax bills on time
  • Any refunds or credits relevant to your taxation debts prior to submission of the Offer in Compromise can be kept by the IRS
  • During the year for which your Offer in Compromise is approved the IRS will be able to hold on to any potential taxation refunds that might have been paid to you
  • The IRS has the power to revoke any Offer in Compromise and demand the total  amount of the debt if you fail to adhere to the contractual rules

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to how to setup an umbrella company.

The UK Economy Could be ‘jump-started’ by a Tax Cut

Back in June, Ed Balls – Labour’s Shadow Chancellor – called for a temporary ’emergency’ tax cut in an attempt to ‘jump-start’ the economy and reverse the slump in consumer confidence since the recession began, the BBC reported.

Describing Labour’s economic policy in a major speech, Mr Balls said that acting immediately to encourage consumer spending and boost the economy would be preferable to just “hoping for the best”.

Mr Balls’ suggestion followed the previous Labour government’s temporary VAT cut back in 2008, when they reduced it to 15% (from 17.5%) in an effort to stimulate a flagging high street by increasing consumer spending.

VAT is a tax that applies to most goods and services provided in the UK.

This proposed move by Labour followed figures released in May that showed UK retail sales fell sharply by 1.4%, showing a significant fall after the previous month’s 1.1% increase.

Following Mr Balls’ speech, George Osborne, the Conservative Chancellor, said that he didn’t have any plans to see the rate of VAT lowered again – making it clear that the increase to 20% should be considered as a “structural” change to the country’s tax system.

You can find the source here if you’d like some further background information.

More recently, David Hanson, Labour’s Shadow Treasury Minister, criticised Conservative plans to reinstate tax relief on private medical insurance for the over-65s and change transferable tax allowances.

Mr Hanson commented: “Instead of unfair tax cuts for a few, we need a temporary emergency VAT cut for everyone until the economy starts growing strongly again. This would be a much-needed boost to all people on low and middle incomes, not just a few. It would boost confidence and get the stalled economy moving again and so help get the deficit down for the long term.”

The BBC has reported that growth in the UK economy slowed in the three months leading up to the 30th June.

Gross Domestic Product (GDP) grew by 0.2% in the second quarter, according to the Office for National Statistics (ONS) – a smaller increase than the 0.5% in the previous quarter. The ONS partly blamed slower growth on factors such as the extra April bank holiday and the Japanese tsunami.

Mr Osborne welcomed the growth as good news. He commented: “The positive news is that the British economy is continuing to grow and is creating jobs. And it is positive news too that at a time of real international instability we are a safe haven in the storm.”

However, Mr Balls said that the slowdown was a ‘serious problem’, and urged the Government to boost growth. He said: “These figures show that last year’s recovery has been recklessly choked off by George Osborne’s VAT rise and spending review.”

4 Steps to Setting Your Own Debt Ceiling

Use Your Tax Return for 2011 To Pay Down Your Debt

Debt is on everyone’s mind these days. The national debt has been covered by every major and minor news outlet for months. They finally reached a resolution to raise the debt ceiling. How nice. If only it were so easy for individual Americans to do the same. Unfortunately it is not, and many Americans find themselves in the same situation as their country. They are living beyond their means and are facing an impending crisis. So how do average American’s deal with their own debt crisis and pay the money owed to their creditors and on their tax return 2011?

1)Refinance

Interest rates have bottomed out and are at record lows. It is a good idea to look into transferring any debt held on high interest credit cards to a those with a lower rate. Pay close attention to transfer fees. You might also take out a home equity loan and go ahead and pay those cars off an cut them up.

2)Cut back

Austerity measures are something that has been advocated for the nation and it can work for you to. Find places where you can sacrifice some creature comforts for long term financial viability.

3)Pay more

By paying down your outstanding debt you reduce the amount of interest owed on outstanding balances. No one ever got out of debt paying only the minimum. Apply your 2011 tax return to this end.

4)Balance your budget

Set up a budget and stick to it. It sounds simple, but it is much harder to establish a budget and stick to it. However, once it is established it becomes habit.