Month: December 2016

          Best Buy has a great name.  You can get a best buy on your favorite home appliances and electronics, at an economical price. 

            Buying for the best price alone is a part of binge shopping.  Stores like Best Buy depend on consumers to buy the “latest and greatest” items.  Never forget- there is a cost for having the latest trend.

            There are some rules for buying large consumer items.  First, never buy on a store credit card.  You cannot afford the convenience, due to the high interest rate on the card.  I have looked at the rates on my credit cards, and the store cards are almost always 18% or more, per year. 

            Watch out for “teaser rates” on store credit cards.  The teaser rate is a low rate on a card, which expires after a period of time.  For example, a store allowed customers to purchase goods on a store credit, with 0% interest for one year.  After one year, the rate went up to approximately 18%.   Not only that, if you failed to pay off the credit card balance within the teaser rate period, one year, you were charged the interest from the date of the purchase.  So if you bought an item for $2,000 on January 1 and failed to pay the bill completely before the end of the year, you had to pay interest from January 1 to December 31 for past due interest.  Don’t get caught in the “teaser rate trap.”    

            Watch out for buying the largest item in the store.  I remember the trend to buy large screen flat panel televisions, which cost $5,000 per TV.  If you buy on credit at 20% a year, the interest charges alone are $1,000 per year.  This is a fast purchase toward bankruptcy. 

            All appliances and electronics should be purchased for cash.  The bigger the item, the more important it is to pay cash.  For most household appliances, under $1,000, you need to have a cash reserve to pay for the item.  Only use store credit in an absolute emergency, such as when your refrigerator must be replaced, and you have no cash or other source of credit.

            With electronics and appliances – separate the necessities from the conveniences.   A convenience such a large screen TV does not need to be  bought immediately on credit.   If the refrigerator breaks, you may have no choice  but to use a store credit card.     

            SHOPPING TIP – EXCEPT IN EMERGENCIES, SET A LIMIT ON THE AMOUNT OF MONEY YOU WILL SPEND PRIOR TO ENTERING A STORE.  TYPICALLY THE AMOUNT IS $50 TO $100.   GO LOOK FOR THE ITEM YOU WOULD LIKE TO PURCHASE.   REVIEW YOUR CHOICES.   THEN LEAVE THE STORE AND WAIT 7 DAYS.  IF YOU STILL WANT THE ITEM, YOU CAN GO BACK AND PURCHASE IT, WITHOUT BINGE SHOPPING.

If you have too much debt on your credit cards, please feel free to contact Attorney Singer.

 

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

The statistics for people involved  in accidents who are texting while driving are frightening. 

Approximately 23% of accidents occurred while people were using a cell phone. 

Text messaging can increase the risk of an accident by 22 times. 

Texting causes approximately 1,600,000 accidents per year.

Texting causes approximately 300,000 accidents with injuries.

Texting is the major cause of accidents by teenagers.

Other interesting statistics

     Dialing a cell phone increases the risk of an accident by 280%

    Talking or listening increases the risk of an accident by 130%

     Reaching for a phone increases the risk of an accident by 140%

 

Stay safe and stay off your cell phone or mobile device while driving.   You lose some level of concentration just by talking on the phone while driving, because you are concentrating on the conversation rather than  the road.

If you need to make a phone call, be safe.  Go to the side of the road, and stop to make the call

Attorney Singer would be happy be help you if you have been involved in a motor vehicle

accident with a distracted driver.

 

He can be reached at

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

 

TFRP is a penalty against any person required to collect, account for, and paver over taxes who willfully fails to perform any of these activities.  See Internal Revenue Manual (IRM) 8.25.1.2.   The penalty is imposed for either wilfull failure to collect tax, or willful failure to account for and pay tax or willful attempt to evade or defeat tax or payment.  ID

            The most common situation encountered for Federal Taxes relates to withholding for employment tax returns for withheld income tax, or social security tax, of employees of a corporation.   IRM  8.25.1.3.1.  

                        Example – Ababa Corporation withholds $100,000 from employees pay, for income and social security taxes.  The President, Joe Ababa, decides to uses the tax money to pay the general bills of Ababa Corporation.   (Note, the trust fund only applies to the money collected, and held in trust for the IRS – the portion of Social Security tax due from the employer is not part of the trust fund).

                        The idea is the following – the Ababa Corporation is withholding its employees money, for social security and employment taxes .  The tax money is really the money of the employees.  The tax money is being held by Ababa Corporation as a trust fund for payment to the Internal Revenue Service.   Joe is improperly taking the employees money, which is due to the Internal Revenue Service.   Joe is a trustee of the trust money.   

            Normally, the corporation is primarily responsible for the taxes.  However, the TFRP allows the IRS to seek collection out of other parties, typically officers and employees of the corporation, who are not primarily liable for the trust fund taxes. 

            The TFRP is assessed against a “responsible person”   in addition to the corporation.   A responsible person is one who “has the duty to perform or the power to direct the act of collecting, accounting for, and paying over the trust fund taxes.”   IRM 8.25.1.4.1.  The most common  persons are officers of a corporations.   However, the IRS may seek to collect from someone who is not an officer – commonly one who handle the books and records, and/or controls the checkbook.  

            Even if a person is responsible, there must be “willfulness, which is “intentional, deliberate, voluntary, and knowing,” with a person who with free will or choice intentionally disregards the law or is plainly indifferent to tis requirements.”   IRM 8.25.1.4.2.   Typically, the IRS is looking for someone who is writing checks, or has the ability to pay the corporate bills, and fails to the pay the trust fund taxes.     

            As the IRS Manual indicates, factors to consider include:

                        Whether the person had knowledge of noncompliance when delinquencies were accruing

                        Whether the person had received prior IRS notices indicating employment taxes had not been paid

                        Whether fraud or deception was used to conceal nonpayment of taxes. 

            The author has seen situations in which a person was held to be a responsible party who willfully failed to pay taxes, where the person had  responsibility for the books and records, was aware of the tax issues, and ignored the tax issues to pay other bills.   

                       

Because of the risk associated with personal liability from the trust fund recovery penalty, anybody associated with a company which fails to pay over taxes to the IRS (or state), should resign immediately.  This is particularly important for someone who has any authority to direct or pay the corporate bills. 

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

Everyone seems to be getting a call from scammers – claiming that you can get a reduced interest rate on your credit card.

Generally, the calls are coming from India. It has become much cheaper to call overseas, with voice over internet protocol (calls over the internet).

Several things for which to watch:

1.  the call is from an unknown number.  A lot of times the scammers are using a fake number, to make it appear that the phone call is from a local party.
2. the caller has a foreign accent.
3. the caller demands that you provide your credit card information over the phone.

In these situations, it is best to immediately hand up the phone.

I have asked the scammers to provide me with a local phone number and I was provided someone else’s phone number.  I have asked for an address to mail information and the scammer refused to provide an address but continued to demand my credit card information.  I have told the scammer that he has an Indian accent and he hung up.

Further information can be found on the Federal Trade Commission Website @

https://www.consumer.ftc.gov/articles/0131-credit-card-interest-rate-reduction-scams

If you are having problems with debt, and I can be of further assistance, please feel free to call Attorney Singer.

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

There has been a lot of news about reverse mortgages.   Some of the news has not been very good.

A reverse mortgage allows a homeowner over the age of 62 to get a loan, against the equity in a house.   The mortgage does not need to be paid off until a borrower sells the house, or dies. 

The advantage of the reverse mortgage is that you get some of the equity out of the house, in the form of cash.   

Unfortunately, there are many disadvantages to a reverse mortgage.   The loan has to be paid back with interest at a later date.  Therefore, if you want to sell your house, you may be surprised at the amount of the loan payoff. 

The loan will require you to continue to pay the taxes, and any other charges which can become a lien on the property, such as water and sewer.    Borrowers have lost their home because they failed to pay the real estate taxes and this was considered a default on the reverse mortgage. 

Unlike a sale in which you get 100% of the sales price after closing costs, with a reverse mortgage you will get far less money.  The lender wants to protect its investment in the reverse mortgage.   Therefore, you may only receive 50% of the value of your residence as proceeds from a reverse mortgage. 

If you later die, the remaining amount of equity in your home may be used to pay off the reverse mortgage interest, which you didn’t pay during your life. 

                        Example – you take out a reverse mortgage at age 65, and receive $100,000

                        If you die at age 82, the mortgage amount due with interest will increase to over $200,000, with a 4.5% interest rate

                       The house will then be sold to pay off the reverse mortgage, with little money left for your children or other close relatives and friends.

 

Many times, it is better to sell property and use the proceeds for living expenses.    Keeping property is expensive, even without a mortgage payment.  And the reverse mortgage may not give someone enough money to keep a property for the rest of his or her life. 

If you are having problems with a reverse mortgage, please feel free to contact Attorney Singer.

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

 

 

Snow tires are different from “All Season” tires.  In the northern part of the United States, all season radial tires should be considered three season tires.  

Unfortunately all season tires are not made for use where there is any snow, such as the Northeast part of the country, where I am located. 

The snow tires are made differently than all season radials, particularly for the snow conditions.  The snow tires have a different composition of rubber, specifically formulated for snow.  

Also, the treads are different on snow tires, to make it easier to grip the snow, during winter conditions. 

There are two downsides to using snow tires.  First, you have you do a winter tire changeover – change your regular tires to the snow tires, before winter arrives.   Also, the winter tires wear faster than the snow tires.   However, the added cost and inconvenience of using snow tires is made up in safety.  

Stay safe during the winter season.  

If you have been involved in an auto accident, feel free to call  Attorney Robert M.  Singer for further assistance. 

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

The State of Connecticut, Insurance Department, Bulletin PC-65, dated December 21, 2009 discusses Public Act 09-72 regarding Underinsured Motorist Conversion Coverage

I am reproducing Page 3 of the Bulletin below

INFORMED CONSENT FORM UNINSURED MOTORISTS COVERAGE

Types of Coverage

Uninsured Motorist (UM)/Underinsured Motorist (UIM) Coverage. Our law requires you to buy Uninsured Motorist (UM/UIM) coverage. Generally, this coverage only applies where the person who causes an accident is not an insured under your policy.

Anyone injured in an accident may seek to recover damages from the person causing the loss. These losses include your medical bills, lost wages (past and future), as well as payment for disabilities, pain and suffering and loss of enjoyment of life’s activities.

Normally, these damages would be paid by the other person’s insurance company. UM/UIM coverage protects you, your family and others in your car for injuries caused by someone who did not buy insurance.

You have the right to choose the amount of coverage. It can be as low as $20,000 per person and $40,000 per accident, or as high as twice your policy’s bodily injury liability coverage limit. The amount of liability coverage you buy will govern the maximum amount of UM/UIM coverage you can buy.

This coverage also includes standard Underinsured Motorist (UIM) coverage. It protects you where injuries are caused by someone whose insurance is not enough to pay your damages and is less than your UM/UIM limits. UIM coverage will pay your damages to fill in the difference between those limits. However, the protection available under standard UIM coverage is usually reduced by amounts paid by workers’ compensation, or by or on behalf of the person at-fault.

Underinsured Motorist Conversion Coverage. Under our law, you can convert standard UIM coverage to UNDERINSURED MOTORIST CONVERSION (UIMC) COVERAGE. This coverage is not reduced by payments from any source. If your damages exceed the amount of the at fault person’s insurance, or other payments, your UIMC coverage will be available for damages not paid.

Both standard (UIM) and conversion (UIMC) coverages only become available after the liability insurance of the at-fault person has been fully paid.

Stacking

Connecticut law does not provide for stacking of UM/UIM coverage. Stacking allows insureds to add together UM/UIM coverage under separate policies or, in multi-car policies, the insurance applicable to each car.

With stacking, if you had two insured cars and you purchased $100,000 of UM/UIM coverage you received (and you paid for) $200,000 of protection. Under current law, the amount purchased ($100,000) is not multiplied by the number of cars insured.

Also, your UM/UIM coverage is limited to the highest available limit under any of the policies that apply to the accident. If you are injured in a car you own, you are limited to the amount of coverage for that car

Important things to consider

1.   Uninsured motorist coverage applies if someone causes and accident and has no insurance to cover your claim.
2.   Underinsured motorist coverage applies if your insurance coverage is greater than that of the responsible party.

Example – you have bodily injury coverage of $100,000

the other party has bodily injury coverage of $20,000.  If you have $40,000 in damages, you can collect $20,000 from the responsible party, and make a claim against your own insurance policy for the additional $20,000.

If you and the responsible party each have $20,000 in coverage, you cannot bring a standard underinsured motorist claim.  To be underinsured, your coverage must be greater that the coverage of the responsible party who caused the accident.

3.  Conversion Coverage.  “This coverage is not reduced by payments from any source.”

You have a personal injury claim with a value of $40,000. The other party has $20,000 in coverage, which the insurance company pays you.

If you have a $20,000 policy, with conversion coverage, you can collect $20,000 from your own insurance company.     Without the conversion coverage, you cannot collect from your own insurance company.

4.  You and several other parties are injured by a drunk driver.  The drunk driver has $100,000 in coverage.   You also have $100,000 in underinsured motorist coverage

The drunk driver’s insurance company pays out as follows

$50,000 to injured party #1

$30,000 to injured party #2

$20,000 to you.

With the conversion coverage you can collect up to $100,000 for your injuries from your own insurance company.

Without the conversion coverage, you are not considered underinsured.

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

Ice can quickly form on a road and sidewalk, when there is rain which quickly freezes on contact with the surface.   It is called “black ice” because you cannot see the ice on the surface, as the ice is clear.  All you see is the surface.   On a road, you see the black surface, of a road, but no ice.

Black ice is extremely dangerous because your car can spin out of control, or you can fall, on a surface which is covered with ice, which you don’t see.

Be particularly careful in situations in which there is rain and the temperature is close to freezing.   The rain may freeze on contact with the ground and cause the black ice.

Also, you can have melting snow, due to a rising temperature.  When the temperature drops, ice can form, causing black ice.

Have a safe winter.

If you have been injured because of an accident from ice or snow, please feel free to call Attorney Robert M. Singer.

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com

 

 

I have heard many clients tell me that the IRS is killing them with the interest charges.  Actually, in many cases, it is the tax penalties which are more costly than the interest.  Therefore, I will start by explaining the common income tax penalties provided by the Internal Revenue Code.

1. The  Fraud Penalty applies when there is “fraud” in the underpayment of tax required to be shown on a return.   The fraud is equal to 75% of the tax underpayment associated with the fraud.   Generally, if there is an underpayment of tax on a return, there is presumption that the entire underpayment is associated with the fraud.

The Internal Revenue Manual gives the definition of “fraud” as follows  – “a deception or misrepresentation of material facts, or silence when good faith requires expression, resulting in material damage to one who relies on it.”   Fraud requires a tax due and owing and fraudulent intent.   Section 25.1.1 of the Internal Revenue Manual.

Most common situations of fraud are intentional understatement of income, or improper deductions.   For example, you use a scheme to hide income, or you have business income which you intentionally fail to report.   Or you take a large deduction for an expense which was never paid or incurred.

The penalty is 75% of the tax which should have been paid, so if the tax due is $10,000, the penalty added on is $7,500, then interest is added to the $17,500 due.

A taxpayer can be separately charged with a crime for tax fraud, but that is a whole other topic.

1. A Failure to File Penalty applies when a taxpayer fails to timely file a tax return.  Income tax returns are generally due on the 15^th of April.   You can file for an automatic extension.

Generally the penalty is 5% of the amount due for the first month, plus 5% for each month until the return is filed.   The maximum penalty is 25% of the tax due.

In the case of a fraudulent failure to file, the penalty goes up to 15% per month, to a maximum of 75% .

Therefore, even if a tax is due and you don’t have the money, file the return.  

2. A Failure to Pay Penalty applies for late payment of a tax due. You are expected to pay a tax when it is due.   The filing of an extension does not extend the time to pay an income tax due on filing. Therefore, you may receive a penalty even if you file an extension.   The extension form requests the estimated amount due at filing – which needs to be paid when the extension is requested.

Generally, the penalty each month is 5% of the tax due for each month past due, up to 25% of the total tax due.   (Note, there can be two penalties at the same time – typically failure to file and failure to pay penalties – which can easily add on 50% to the tax already outstanding).

3. Accuracy Related Penalties apply for making an error, on a tax return, which results in a deficiency.  I will only cover the errors which I have most commonly seen with taxpayers

Internal Revenue Code Section 6662 provides for a penalty for negligence or disregard of the rules or regulations, and substantial understatement of income tax.   See Internal Revenue Manual Section 20.   Section 6676 imposes a penalty for an improper claim for refund or credit concerning income taxes.

Let’s start with the “substantial understatement of income.”   Generally, an understatement is the tax amount required to be shown on the return in excess of the tax shown on the return.    Basically, your correct tax bill exceeds the tax bill due on the return which you filed.   An understatement is substantial if it is greater than $5,000 or 10% of the tax return to be show on the return.  So if the actual tax due is $24,000, the understatement is substantial if it is greater than $5,000 or $2,400.

“Negligence” includes “any failure to make a reasonable attempt to ascertain the correctness of a reported item “which would seem to a reasonable and prudent person to be ‘too good to be true’ under the circumstances.”   See Internal Revenue Manaual Section 20.1.5.7.1 2.  When disregarding rules, the action includes “careless, reckless, or intentional disregard.”    Unfortunately, even if there is no substantial understatement of income, the IRS is likely to assess the negligence penalty, unless the taxpayer can show a good faith basis for reporting a particular tax item in a particular way, such as reference to the Internal Revenue Code, or Regulations.

However, if the taxpayer does not prepare his or her own return, the taxpayer can blame the tax preparer.    The IRS is supposed to consider the “experience, knowledge and sophistication and education of the taxpayer.  IRM 20.1.5.6.3 1.   Reliance on a tax opinion … may serve as a basis for .. good faith exception to the accuracy related penalty.

The penalties are equal to 20% of the additional tax due to the error.

To avoid tax trouble with the IRS, people with any type of complicated tax return need to use a tax preparation service, and provide all relevant and accurate information to the service.   Turbo Tax won’t do.

Attorney Robert M. Singer

Law Offices of Robert M. Singer, LLC

2572 Whitney Avenue

Hamden, CT  06518

203-248-8278

rsingerct@yahoo.com