Demand from Corporate Clients Boosts Audio Conferencing Efforts in Latin America

Research and Markets has announced the addition of the new Frost & Sullivan Report Latin America Audio Conferencing Services Markets to their offering.

This Frost & Sullivan research service titled "Latin America Audio Conferencing Services Markets" provides an overview of the audio conferencing landscape in the six main markets in Latin America, with revenue and minute consumption forecasts for each country, along with a complete analysis of key market drivers, restraints, and trends that are impacting this market. In this study, Frost & Sullivan's expert analysts thoroughly examine the following modalities: reservation less, operator assisted, and scheduled/unattended.

Demand from Corporate Clients Boosts Audio Conferencing Efforts in Latin America

Due to the rapidly developing infrastructure, companies in Latin America are increasingly pressuring audio conferencing service providers to expand their offering. Latin American carriers as a result, have been displaying a reactive behaviour toward this offer, contrasting the proactive approach of non-carrier service providers. "Non-carrier service providers detected a need that is not being fully satisfied by the carriers and decided to launch conferencing solutions for corporate markets," according to the analysts of the study. "Currently these non-carrier service providers have started to push services such as video and web conferencing, as they consider bundling solutions a way to obtain greater revenues and new clients."

In Argentina, carriers provide audio conferencing service as a complementary portfolio offer in order to avoid investing in advertising this service. In addition, carriers are not enhancing audio conferencing services in the way they are conceived at present; and such conference bundling solutions are expected to be offered taking into account IP technologies. Nevertheless, audio conferencing service is anticipated to become a part of bundled services that contemplate video and data experiences.

Modest Growth Expected for the Audio Conferencing Service Market

The Latin American audio conferencing services markets generated revenues of $15.8 million in 2005. Although these markets are nascent, it is anticipated to witness a moderate growth mainly due to restraining factors such as cultural behavior that values face-to-face meetings and a lack of awareness about audio conferencing offers. Nevertheless, the markets present interesting opportunities for carriers and non-carriers, due to the clients need to cut costs and maximize productivity.

Small- and medium-scale companies do not generally use audio conferencing services. Budget restraints make them use substitutes such as VoIP services. Despite this, there exists a small market for these services. "The demand is sustained by families with members living in distant locations," explain the analysts. "This particular market is being developed by non-carrier service providers that consider this a niche segment to enhance their offering."

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Mortgage applications for Rose U.S. home purchases and refinancing Says The Mortgage Bankers Association

Mortgage applications for U.S. home purchases and refinancing rose last week when long-term borrowing costs dipped, an industry trade group said Wednesday.

The Mortgage Bankers Association's seasonally adjusted index of mortgage applications increased 3.2 percent to 626.1 in the week ended Feb. 23, up from this year's low of 606.6 in the prior week.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, declined 0.03 percentage point to average 6.16 percent, the lowest since it hit 6.13 in the year's first week, according to the MBA.

The MBA's seasonally adjusted purchase index, seen as a timely gauge of home sales, rose 5.2 percent to 401.3 in the latest week, it said.

The group's seasonally adjusted refinancing index advanced 1.2 percent to 1,943.5.
Home price slump continues

The week's results are adjusted for the Presidents Day holiday.

On a four-week moving average, the seasonally adjusted market index is down 0.2 percent to 625.6 and the purchase index is off 0.4 percent to 397, the MBA said.
Mixed signals

The state of the U.S. housing sector is critical for determining the health of the economy, most economists agree. Signals have been mixed.

Some economists suggest the swift slump following a record five-year surge in home sales and prices is near its end, while others say the correction has not yet been deep enough.

Sales of existing homes in January staged their biggest gain in two years, boosted by unusually warm weather, according to the National Association of Realtors on Tuesday.
Freddie Mac moves to avoid risky mortgages

The housing market is unlikely to enjoy a sustained upturn with a glut of homes on the market.

Inventories of unsold existing homes in January remained high at a 6.6 months' supply based on the current sales pace.

Builders for months have been slicing prices and offering incentives to lure buyers and pare inventory.

The national median existing home price fell nearly 5 percent in January to $210,600 from $221,600 the prior month, and was 3.1 percent less than January 2006, the NAR reported.

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Avoiding Isolating Yourself When You're The Only Minority

Denene Brox,

Despite advances in corporate diversity initiatives, there are times when minority employees have that "Lone Ranger" feeling on the job.

Make Connections

According to Sondra Thiederman, author of "Making Diversity Work," the key to avoiding feelings of alienation, whether at a small or large company, is to find ways to connect with your coworkers.

"Begin to focus on what you share with your colleagues, rather than how you differ. Race and gender are just one aspect of who we are," explains Thiederman.

"We all have dozens of interests, values, and priorities which are very likely held by others in the organization. Reach out to people, have conversations and be open with what you care about. Sitting next to you just might be a colleague of any color with whom you can form a genuine friendship."

Avoid Speaking for All

Another key in avoiding isolation is to resist any urge to be the "spokesperson" for your race or gender even if you feel pressure to act as one.

"Individuals who represent a minority group on a team or in an organization run the risk of being seen as symbols of their particular category rather than as individuals," says Robert Rodriguez, assistant dean of the Graduate School of Management at Kaplan University. "That is why minority employees should resist any pressure to be an 'expert' on all issues related to their race or ethnic group. Don't make educating others about the unique aspects of your cultural or ethnic heritage or overcoming stereotypes your sole focus."

Address Incidents With Professionalism

Even if you've made your best effort to be seen as an individual, discrimination may still rear its ugly head. If a situation arises that you feel is inappropriate, you need to address it with professionalism -- not heated emotions.

"The first step is to take a beat so that emotions can settle down," says Thiederman. "Even a couple of hours will give you a chance to collect your thoughts so you can recount the incident accurately."

"Second, find out who is the appropriate person to approach, such as a manager or someone in human resources," she says. "Talk to someone who is trained to handle such situations with confidentiality, tact, and fairness for all concerned."

"Your main concern should be delivering superior results to quench any doubts about your ability," says Rodriguez.

Check Your Perspective

A lack of diversity isn't necessarily a bad reflection on the company. A number of factors could be at play, such as a small staff.

Precious Kirk, vice president of creative affairs at Emerson Consulting Group in Everett, Massachusetts, is the only African American female on a staff of 10.

"Working within this company I do not have a problem being the only minority. We work so closely together that it becomes a situation in which I really don't think about it too much," says Kirk.

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Decide Now Whether To Keep A Mortgage In Retirement Or Pay-Off Before Retirement

Elaine E. Bedel

President, Bedel Financial Consulting

There are two schools of thought regarding residential mortgages during your retirement years. One says it is a sound financial strategy to retain the mortgage, while the other prefers the security and peace of mind that is a result of being mortgage-free. Which works for you?

Reasons to Keep a Mortgage in Retirement

• Maximizing Investment Return. If you have a low mortgage rate, it makes sense to invest extra funds in an investment vehicle that would earn a higher total return. If you pay off your mortgage, your investment return is equal to the mortgage interest rate. For example, if your mortgage rate is 5.5%, you must ask yourself if you can earn a higher return by investing the funds elsewhere. You should compare your mortgage rate to other long-term investment rates of return. If you are comfortable with the risk/return of a higher-yielding investment vehicle, then it is beneficial to invest the extra funds instead of paying off the mortgage.

• Mortgage Interest is Deductible. In the 1980's, tax law changes eliminated the deductibility of most types of interest, leaving only residential mortgage interest as deductible on your income tax return. Therefore, it is better to borrow against your home equity to purchase a car, make home improvements, or finance other large ticket items, rather than to secure a non-deductible car loan or other personal loan in retirement. After the income tax savings, a mortgage interest rate of 7% will net down to approximately 5%, making a home equity loan more cost effective than a car loan with a rate of 6.5%.

• Forced Savings. For some homeowners, paying the mortgage is a type of forced savings. With each payment, some amount of principle is being paid down on the loan, therefore, increasing the equity in the home. If the house is also appreciating in value, the equity continues to grow.

Reasons to Pay-Off the Mortgage Prior to Retirement

• Reduce Living Expenses. A mortgage payment generally represents 20% to 30% of the monthly budget. With the mortgage paid off, the monthly expenses become more manageable in retirement, especially if the retiree is on a fixed income budget.

• Nest Egg for Long-term Care. The equity in a home is considered by many to be a resource for providing for long-term care or other emergencies. In the event the retiree needs to move into an assisted living facility, the home equity can be tapped either by selling the residence or securing a reverse mortgage.

• Financial Security. Pure and simple, many people are more comfortable without a mortgage in retirement. The security of knowing that the house is paid for reduces the financial stress of retirement.

Plan Now

If you believe you would like to be mortgage free in retirement, begin to plan now. If your existing mortgage extends beyond your expected retirement date, there are several strategies you can employ.

• Consider Refinancing. If you are in your mid 40s and on the front end of a thirty year mortgage, you many want to consider refinancing to a fifteen year mortgage. Many Baby Boomers have initiated this strategy. The mortgage interest rate is generally lower for a fifteen-year versus a thirty-year mortgage, but the monthly payments may be higher. Therefore, it is important that you consider the impact of the new payment on your cash flow.

• Prepay Principal. Most mortgage lenders will allow borrowers to make additional principal payments each month. This will decrease the life of the loan as well as reduce your overall interest charges. If your current mortgage rate is lower than the rate of a new mortgage, paying additional principal each month is a better option than refinancing.

• Bi-weekly Payment Plans. You can set-up your loan payments to be made every two weeks instead of once a month. Each payment is equal to half of your normal mortgage payment. Since there are 52 weeks in a year, you will make 26 half payments. This results in 13 full payments versus the normal 12 monthly payments. The extra payment will allow you to pay off the mortgage early. Since there are extra fees required by the lenders to establish this bi-weekly program, it is generally better to make extra principal payments each month rather than pay the set-up fees. However, for some homeowners who are paid every two weeks, this mortgage payment cycle may be more manageable.


Almost 70% of Americans own their homes. Of the owners, 35% are mortgage free. According to the AARP, of those households headed by someone age 75 or older, three-fourths have no debt. If you prefer the peace of mind of being mortgage-free in retirement, review your situation today and take the necessary steps to achieve that goal.

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Home Remodeling Plans - Loan or line of credit, which is right for you?

As a homeowner, you're in an ideal position to use the growing equity in your home to finance home improvement projects. Whether you choose a home equity loan or line may depend on one of these factors:

  • If you need money for a large home improvement or renovation project, a home equity loan allows you to pay off a larger loan over a longer term. Your loan is secured by a mortgage or deed of trust in second position on the title of your home. This type of loan is paid to you as one lump sum.
  • If you intend to borrow relatively small, variable amounts and pay back the principal quickly, a home equity line of credit can cost less than a home equity loan. It can offer you the ability to draw money for making improvements only as you need it.

Home improvements can help increase the value of your home. A Chase Home Equity Line of Credit or Chase Home Equity Loan can give you the flexibility to make the improvements you need-without tapping into cash you may want to set aside for other purposes.

Here are more tips to consider when you plan to improve your home:

  • Unless you use a home equity loan to refinance your existing first mortgage loan, the terms of your first mortgage loan will not change when you take out a home equity loan. Typical loan terms range from five to 30 years. Any existing home equity accounts, also known as second mortgage loans, must be paid off with the new home equity loan.
  • If you make home improvements with the specific intent of increasing the resale value of your property (as opposed to just making it more comfortable to live in), make sure the renovation will add the value you want. For example, a kitchen renovation might recover the money spent and more, whereas adding a pool might not. Your local real estate agent may be able to provide valuable insights about the improvements that most interest the buyers in your area.
  • Before deciding on a final loan amount, complete a cost breakdown that itemizes the estimated cost of your home improvement. Include the items you will need, such as building materials (lumber, concrete, etc.), labor and decorating (paint, tile, etc.), as well as a contingency amount for possible unplanned expenses.
  • A home equity account can provide a tax-deductible way to improve your home and increase its value. Note, however, that you should always consult a tax advisor about the deductibility of interest. There are typically no restrictions for home improvement, as long as it is within the boundaries of local building requirements. You have the choice of doing the improvement work yourself, or using a contractor.

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Sellers On Ebay Should Pay Taxes, Experts Tell IRS

Verne Kopytoff,

Chronicle Staff Writer

When it comes to paying income taxes, eBay's legions of small-time entrepreneurs are on an honor system in which they are supposed to declare their profits to the Internal Revenue Service. Many users, however, ignore the law or are unaware of their obligation.

Now a growing chorus of tax experts is hoping to crack down on the cheating by requiring eBay -- and other online auctions, such as those on Yahoo, and Amazon -- to track users and report their gross sales to the federal government. Armed with such information, the IRS could better seek any taxes owed, potentially reaping millions of dollars in extra revenue for the U.S. Treasury.

But requiring eBay to out its sellers to tax collectors could send a shockwave across its vast online bazaar, where users trade everything from Ferraris to Ugg boots to pepper spray. Paying Uncle Sam could significantly reduce their profits or even make their businesses money-losers.

The latest call for more aggressive tax collection was heard last week at a congressional committee hearing focused on closing the tax gap, the hundreds of billions of dollars in taxes that go unpaid each year. Nina Olson, the national taxpayer advocate for the IRS, spoke of the heavy burden put on the nation by the shortfall and then cited undeclared online sales -- particularly on eBay, given its size -- as part of the problem.

"The IRS must have the tools needed to address under-reporting of this income," said Olson, whose job is to voice taxpayer concerns to the federal government.

EBay, based in San Jose, has 97 million U.S. users, who, in 2006 sold $25.2 billion in merchandise, exceeding the gross national product of many countries. More than 720,000 Americans make their primary or secondary income from the Web site, according to a 2005 study.

How many eBay users pay the taxes they owe on their online earnings is unknown. But experts suspect the percentage is low.

Virtually all tax filers -- 96 percent -- pay what's owed on income that is reported to the IRS by a third party, such as when a bank reports interest earned on a savings account, according to the IRS. However, when a third party doesn't tip off the government, compliance drops dramatically, to below 50 percent.

The remedy, according to many federal officials, is to expand reporting requirements. The question is, which businesses and what kind of income should fall under the rules?

As part of his proposed federal budget for 2008, President Bush made what many believe is the first step to more vigorously collect taxes on online sales. Although vaguely worded, the proposal would require "brokers," or middlemen, to collect taxpayer identification numbers from clients and report their sales of personal property to the IRS on a 1099 form if sales surpass 100 transactions or more than $5,000 annually.

Under current law, eBay and other auction sites aren't considered brokers. But definitions can be changed.

In November, a citizen advisory group for the IRS recommended as much. Expanding the definition to include online auctions, the group said, would open the door to reporting and increased tax compliance.

Paul Heller, chairman of the citizen advisory group, made up of accountants and tax preparers, applauded the president's proposal, but called it so nebulous that it's unclear what kind of businesses he's targeting. Heller, a vice president for JPMorgan Chase, suspects that the provisions are at least partly aimed at Internet sales.

"I have no idea who it would be referring to," Heller said of the proposal, "if not online auctions."

Jennifer Zuccarelli, a spokeswoman for the Treasury Department, declined to name any companies the Bush proposal applies to. All she would say is that the provisions would affect both online and offline commerce, without discrimination as to the medium.

Other than Internet sales, tax experts said that art galleries and consignment stores could be potential targets of the Bush proposal.

Hani Durzy, a spokesman for eBay, insisted that his company would be unaffected if Bush's ideas are enacted as written. EBay doesn't meet the definition of a broker, he said, because it never takes possession of the merchandise its users sell.

In any case, Durzy said eBay doesn't even know whether any given transaction is completed and therefore can't report authoritatively about a user's sales to the IRS.

Simply reporting to the government, he added, would be a financial burden for his company.

David Yaskulka, marketing chairman for the Professional eBay Sellers Alliance, an industry group of more than 500 big eBay sellers, said it wouldn't bother him if eBay reported sales information about its users to the IRS. In his experience, big sellers already pay their fair share.

"Every professional seller I've ever talked to pays their taxes and has no problem with anyone finding out about the level of business they're doing," Yaskulka said.

His concern is that legislation will unfairly target eBay. All sales venues, online or off, should be treated the same, he said.

The next step for the proposed legislation, along with a number of other of Bush budget ideas, is to go through Congress, starting with the House Ways and Means Committee. Members are likely to address the issue during an upcoming hearing on closing the tax gap, tentatively scheduled for mid-March.

Matthew Beck, a spokesman for the committee's Democratic majority, declined comment, other than to say of the Bush proposal, "We certainly take that as a starting point, and we certainly look forward to addressing the tax gap."

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Its Time To Change Your Career

Jane Allen,

Changing careers can be like taking a train trip. You plan it, start at one location and go to your ultimate destination, with stops in between. (Sorry, there are no non-stop career trains.) The basics for getting started are scheduling your departure time and showing up at the station. Here's how to get moving.

Decide when you are leaving.
There are many reasons to procrastinate about changing careers. Procrastination is not laziness; it is a decision to do nothing. Fear is the main reason for procrastination -- fear of the unknown, fear of failure, fear of making a mistake. What is your fear? Identify it, acknowledge it and accept that you are afraid. Then decide what first step (even a small one) you will take within the next week to get around that roadblock.

Pack your bag.
A key to success is what you will take along with you. Make sure your luggage includes optimism, enthusiasm and determination. Jon Stewart of Comedy Central's "The Daily Show" was interviewed recently on CBS's "60 Minutes." When asked what his big break had been, he said, "Deciding that -- come hell or high water, no turning back -- I am going to do [comedy] and get as good as I can get."

Who's seeing you off at the station?
There may be both cheerleaders and detractors. Listen to each of them, but choose carefully which advice you are going to take with you. Jerome Lemelson invented the camcorder. His first patent application (in 1977) was rejected because the patent examiner decided that video recorders could not possibly be reduced to a portable size. Mr. Lemelson was not discouraged.

Are you going to enjoy the ride?
A career change involves many steps. Enjoy each accomplishment and the feelings of exhilaration, satisfaction and self-approval that come with it. Without that enjoyment, can there be true feelings of progress? Successful people enjoy both the journey and the arrival.

Who's on the train with you?
Don't stay in your compartment. There will be interesting and valuable people to talk to on your journey. Think of it like a scavenger hunt. They have information for you; your mission is to meet them and ask questions.

What if you find yourself on the wrong train?
It happens. Winners make the most mistakes because they take the most risks. If you have to change trains, think of it as a course correction and keep moving.

What if there's no one to meet you at your destination?
OK, you've chosen your new career path and started sending out resumes, but no one is showing up to welcome you. What's next? Be persistent and believe in yourself. Rod Serling (creator of "The Twilight Zone" and "Night Gallery" TV shows) received 40 rejection slips in a row while he was waiting for his big break. He kept his day job and, despite the rejections, never stopped writing or submitting his stories.

Make this your success strategy for the month: Get going and keep moving. Starting with just one tiny step each week is still a beginning. As Will Rogers said, "Even if you're on the right track, you'll get run over if you just sit there."

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Common Mistake Candidates Make In Discussing Or Negotiating Salary

Don't Fence Yourself In

The most common mistake is bringing up salary too soon and pinpointing specific numbers. Candidates should leave salary discussions until the end of the process. If you are working through a recruiter and are asked about salary, the best answer to give is: "I have spoken to the recruiter about my salary requirements and I would feel more comfortable if you discussed it directly with him." If not working with a recruiter, you should let the employer kindly know you are looking for a market-competitive salary for your skill set, and you are taking into account the entire compensation package and opportunity as a whole. You should stray away from discussing your current compensation specifics -- at the very least in the initial interviews.
-- Lindsay Olson, partner, Paradigm Staffing

Be Honest and Accurate

Quite often, a candidate's compensation numbers change as they go through the interview process. What started as "around $150K base" in early discussions suddenly becomes $167,500 when they realize they are actually in contention. The best formula is to write out, in detail, all elements of your remuneration over the last few years to ensure you have a true picture. This becomes more important for senior executives with complex stock positions.
-- Anu Datta, executive recruiter, Korn/Ferry International

Look at the Big Picture

Candidates forget about the total compensation package and focus exclusively on base salary as the sole determining factor when deciding to accept or reject an offer. There are many other items to consider, such as benefits, short- and long-term career growth, personal satisfaction, company philosophy, reputation and size of the organization, and work/life balance. Many of these items can't be quantified, but often they can make or break a team member's long-term satisfaction with a company.
-- Jill Davis, recruiter with Wells Fargo's operations team

Focus on Career Goals

The biggest mistake candidates make is that they believe they will get a huge increase in salary simply because they are moving on to another role. While in some cases that may be true, the reality is that a new opportunity does not guarantee new fortunes. Do not let money be your highest priority. Look for a role that suits you best and concentrate on impressing the recruiter/hiring manager with your career goals, not financial goals. Once your offer is presented, chances are your compensation package will be a fair one based on your skills and the organization's needs.
-- Bob Hancock, independent staffing consultant

Timing Is Crucial

Candidates should remember that, at the end of the day, they can always say "no" to an offer. With this in mind, there is no reason for them to embellish, change, or otherwise dissemble about their current or past salary. Telling the complete truth from the beginning sets the tone for the whole relationship with the hiring manager and recruiter.

Let the recruiter know about any bonuses, stock-option vesting, or related compensation details, and the timing is crucial. If the hiring manager likes you, she will do her best to make you a competitive offer, and will appreciate your honesty throughout the process. Revealing hidden details about compensation after the offer is made does not bode well for a beneficial manager/employee relationship.
-- Ross Pasquale, owner, Monday Ventures

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Janitorial service caught up in immigration sweep; 200 arrested


The Associated Press

More than 200 illegal immigrants were arrested and three officials at a nationwide janitorial service face federal fraud and tax charges after an investigation of cleaning crews at a northern Michigan resort, government officials said.

The detainees - mostly Mexican nationals - who were rounded up early Thursday were working as janitors for Rosenbaum-Cunningham International Inc., or RCI, a Florida-based cleaning contractor.

RCI co-owners Richard M. Rosenbaum, 60, of Longwood, Fla.; and Edward Scott Cunningham, 43, of West Palm Beach, Fla.; and firm controller Christina A. Flocken, 59, also of Longwood, face criminal fraud, immigration and tax charges in a 23-count indictment unsealed Thursday in U.S. District Court in Grand Rapids.

"This is not a case of bad bookkeeping or skirting the rules," said Brian M. Moskowitz, special agent in charge of the Detroit office of U.S. Immigration and Customs Enforcement. "It involved flagrant criminal behavior."

Moskowitz said during a news conference in Grand Rapids that federal agents arrested Rosenbaum in Longwood earlier in the day. Cunningham and Flocken were expected to soon turn themselves in to federal authorities in Grand Rapids, where the case will be tried, he said.

Their practice of paying cash wages to their workers deprived the U.S. government of about $18.6 million in employment taxes, according to the indictment.

"In this particular investigation, these defendants took advantage of illegal workers in order to enrich themselves by violating the internal revenue laws that were created specifically to protect the legitimate work force, all at a cost to taxpayers of approximately $18 million, all so that they could live a very lavish lifestyle and live the high life," said Sandra L. Carter, special agent in charge of the Internal Revenue Service office in Detroit.

About 203 illegal immigrants who worked for RCI were arrested and expected to be deported, Moskowitz said. Agents took them into custody at 63 business locations in 17 states and the District of Columbia.

An outgoing telephone message from RCI's headquarters in Palm Beach, Fla., said the company - incorporated in Nevada - had "ceased operations" effective Thursday.

There was no home phone listing in Longwood for Rosenbaum and calls could not be completed to West Palm Beach homes listed under Cunningham's name. A woman who identified herself as Flocken hung up on a reporter who called her at home.

The joint ICE-IRS investigation began 20 months ago at the Grand Traverse Resort in Acme in Michigan's northwestern Lower Peninsula.

RCI contracted with the resort between June 1997 and March 2006, according to the indictment. Between 2002 and 2006 alone, Grand Traverse paid RCI more than $3 million for grounds and maintenance services, kitchen cleaning and housekeeping duties.

Not only did RCI fail to pay employment taxes on its nationwide operations - its clients included such venues as Planet Hollywood, Hard Rock Cafe and ESPN Zone - but its top officials also had its supervisors procure and maintain a work force of illegal immigrants and authorized managers to provide them with fake resident cards, or green cards, according to the indictment.

Planet Hollywood founder and owner Robert Earl said Thursday evening that his restaurants never used RCI for cleaning. The company did contract with an earlier janitor firm that was operated by the RCI officials, but ended that relationship by 2001, Earl said in an interview with The Associated Press. He denied that janitors at any of his restaurants were included in the sting.

"I have phoned all the restaurants, and we have had no (federal) visits, and do not employ this company," Earl said in a telephone interview from Orlando, Fla.

Spokespeople with the U.S. Attorneys' office in Grand Rapids, Mich., and U.S. Immigration and Customs Enforcement could not immediately clarify whether Planet Hollywood was linked to the illegal activity.

The three company officials facing charges also set up shell companies to hide excess assets, the indictment says.

Although the case is being prosecuted in Grand Rapids, none of the illegal immigrants picked up Thursday was arrested in Michigan.

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The New 'Visa' Card?

J.D. Hayworth

Money couldn't buy the publicity that the Bank of America has received in recent days. Not money alone, because money isn't inherently bad but sometimes people do the wrong thing to get it.

Sure, cold hard cash is at the root of the B of A's decision to market credit cards to illegal aliens -- a decision that has ignited a firestorm of criticism across the country, and the type of publicity that any business would rather avoid -- but why would a financial institution take up this type of dubious, dangerous business?

Because it can. And because the Washington bureaucracy has encouraged it. In fact, this sorry episode serves as an object lesson in bureaucratic tyranny. In this case, "tyranny of the Treasury."

Amidst the alphabet soup of acronyms that originate in Washington is this four-letter concoction: ITIN. It stands for Individual Taxpayer Identification Number, and was instituted by regulation from the Treasury Department. Not by an executive order, not by legislation, but by bureaucratic design.

In July, 1996 Treasury instituted the ITIN for individuals who owe taxes but are not eligible for a Social Security number. Ostensibly, it was intended to be used by foreign investors who must pay U.S. taxes. Instead, illegals rather than investors have come to embrace the ITIN. Initially, all they had to do was ask for an ITIN; now, they can apply for one only when filing a tax return.

Why would people who initially avoid any contact with the federal government, thrive by avoiding federal detection, then suddenly sign up with the Internal Revenue Service (IRS), one of Uncle Sam's most feared agencies, and willingly file U.S. tax returns?

Because a tax form offers many happy "returns" for an illegal. With a tax return, illegals have discovered that banks and other financial institutions will offer them home loans and other services -- like credit cards.

So the Bank of America's promotional campaign is only the most recent effort to put credit cards into the hands of illegals…and the most blatant.

Even as our nation fights a war against an enemy which will use every tool as its disposal, including fraud and identity theft, Washington chooses to ignore the chance that real live terrorists might open a line of credit just as easily as illegals who come here from Mexico.

This is a dangerous form of denial, and it has poisoned a bureaucracy that focuses more on April 15 than it does on September 11.

Here is what IRS commissioner Mark Everson told the Ways and Means Oversight subcommittee in March of 2004:

We are fully sensitive to the possible dangers that can arise from the misuse if ITINs for the purpose of creating an identity, including the possible threat to national security [emphasis added]. Regardless of undesirable behaviors actually or potentially associated with the ITINs, the [Internal Revenue] Service remains legally responsible for enforcement of the nations federal tax laws with respect to ITIN holders, including the responsibility to assess and impose tax in ITIN holders irrespective of the circumstances of their employment or the possibility that ITIN applicants may be solely or collaterally seeking the procurement of an ITIN to establish identity for non-tax purposes.

Only a little translation from “bureaucratese” is needed: simply stated, the IRS commissioner is saying, “National Security is not my job.”

Everson was even more candid in another oversight subcommittee hearing just last year, when he stated that his agency concentrates on revenue -- not the ways in which that revenue was earned. It led one committee member to cynically speculate that the IRS would welcome the imposition of a federal tax on bank robbery -- making the crime an afterthought so long as the feds got their hands on a sizable chunk of change.

With a President once again reluctant to move aggressively, and a Congress very much accustomed proceeding at a glacial pace, the American people seek their own remedy. Across the nation, Bank of America credit cards are being shredded, and accounts are being closed.

The impact of market forces can cut both ways, and could serve to teach the Bank of America a lesson about the nation for which it is named. It will be a very expensive lesson. If it is a lesson unheeded by the Treasury Department, then far greater costs await our nation and our people.

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IRS's Top 12 Tax Scams of 2007

AXcess News

The fun's over, says the Internal Revenue Service, if you're out there trying to scam tax payers this year. So to help prevent these money-grabbing criminal activities, the IRS has put together it's "Top 12 Tax Scams of 2007" list.

The Internal Revenue Service today identified 12 of the most blatant scams affecting American taxpayers and warned people not to fall for schemes peddled by scamsters.

This year the "Dirty Dozen" highlights five new scams that IRS auditors and criminal investigators have uncovered. Topping off the list are fraudulent refunds being claimed in connection with the special Telephone Excise Tax Refund available to most taxpayers this filing season. The IRS is actively investigating instances of this scam involving tax preparers who are preparing inflated refund requests.

Also new to the Dirty Dozen this year are abuses pertaining to Roth IRAs, the American Indian Employment Credit, domestic shell corporations and structured entities.

"Taxpayers shouldn't let their guard down," IRS Commissioner Mark W. Everson said. "Don't get taken by scam artists making outrageous promises. If you use a tax professional, pick someone who is reputable. Taxpayers should remember they are ultimately responsible for what is on their tax return even if some unscrupulous preparers have steered them in the wrong direction."

Involvement in tax schemes leads to problems for scam artists and taxpayers. Tax return preparers and promoters risk significant penalties, interest and possible criminal prosecution.

The IRS urges taxpayers to avoid these common schemes:

1. Telephone Excise Tax Refund Abuses: Early filings show some individual taxpayers have requested large and apparently improper amounts for the special telephone tax refund. In some cases, taxpayers appear to be requesting a refund of the entire amount of their phone bills, rather than just the three-percent tax on long-distance and bundled service to which they are entitled. Some tax preparers are helping their clients file apparently improper requests. The IRS is investigating potential abuses in this area and will take prompt action against taxpayers who claim improper refund amounts and against the return preparers who help them.

2. Abusive Roth IRAs: Taxpayers should be wary of advisers who encourage them to shift under-valued property to Roth Individual Retirement Arrangements (IRAs). In one variation, a promoter has the taxpayer move under-valued common stock into a Roth IRA, circumventing the annual maximum contribution limit and allowing otherwise taxable income to go untaxed.

3. Phishing: Phishing is a technique used by identity thieves to acquire personal financial data in order to gain access to the financial accounts of unsuspecting consumers, run up charges on their credit cards or apply for loans in their names. These Internet-based criminals pose as representatives of a financial institution - or sometimes the IRS itself - and send out fictitious e-mail correspondence in an attempt to trick consumers into disclosing private information. A typical e-mail notifies a taxpayer of an outstanding refund and urges the taxpayer to click on a hyperlink and visit an official-looking Web site. The Web site then solicits a social security and credit card number. It is important to note the IRS does not use e-mail to initiate contact with taxpayers about issues related to their accounts. If a taxpayer has any doubt whether a contact from the IRS is authentic, the taxpayer should call 1-800-829-1040 to confirm it.

4. Disguised Corporate Ownership: Domestic shell corporations and other entities are being formed and operated in certain states for the purpose of disguising the ownership of the business or financial activity. Once formed, these anonymous entities can be, and are being, used to facilitate underreporting of income, non-filing of tax returns, listed transactions, money laundering, financial crimes and possibly terrorist financing. The IRS is working with state authorities to identify these entities and to bring their owners into compliance.

5. Zero Wages: In this scam, which first appeared in the Dirty Dozen in 2006, a Form 4852 (Substitute Form W-2) or a "corrected" Form 1099 showing zero or little income is submitted with a federal tax return. The taxpayer may include a statement rebutting wages and taxes reported by the payer to the IRS. An explanation on the Form 4852 may cite statutory language behind Internal Revenue Code sections 3401 and 3121 or may include some reference to the paying company refusing to issue a corrected Form W-2 for fear of IRS retaliation.

6. Return Preparer Fraud: Dishonest return preparers can cause many headaches for taxpayers who fall victim to their schemes. Such preparers make their money by skimming a portion of their clients' refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Some preparers promote filing fraudulent claims for refunds on items such as fuel tax credits to recover taxes paid in prior years. Taxpayers should choose carefully when hiring a tax preparer. As the old saying goes, "If it sounds too good to be true, it probably is." Remember that no matter who prepares the return, the taxpayer is ultimately responsible for its accuracy. Since 2002, the courts have issued injunctions ordering dozens of individuals to cease preparing returns, and the Department of Justice has filed complaints against dozens of others. During fiscal year 2006, 109 tax return preparers were convicted of tax crimes and sentenced to an average of 18 months in prison.

7. American Indian Employment Credit: Taxpayers submit returns and claims reducing taxable income by substantial amounts citing an American Indian employment or treaty credit. Although there is an Indian Employment Credit available for businesses that employ Native Americans or their spouses, there is no provision for its use by employees. In a somewhat similar scam, unscrupulous promoters have informed Native Americans that they are not subject to federal income taxation. The promoters solicit individual Indians to file Form W-8 BEN seeking relief from all withholding of federal taxation. A recent "phishing" variation has promoters using false IRS letterheads to solicit personal financial information that they claim the IRS needs in order to process their "non-tax" status.

8. Trust Misuse: For years unscrupulous promoters have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. However, some trusts do not deliver the promised tax benefits. There are currently more than 150 active abusive trust investigations underway and 49 injunctions have been obtained against promoters since 2001. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust.

9. Structured Entity Credits: Promoters of this newly identified scheme are setting up partnerships to own and sell state conservation easement credits, federal rehabilitation credits and other credits. The purported credits are the only assets owned by the partnership and once the credits are fully used, an investor receives a K-1 indicating the initial investment is a total loss, which is then deducted on the investor's individual tax return. Forming such an entity is not a viable business purpose. In other words, the investments are not valid, and the losses are not deductible.

10. Abuse of Charitable Organizations and Deductions: The IRS continues to observe the use of tax-exempt organizations to improperly shield income or assets from taxation. This can occur when a taxpayer moves assets or income to a tax-exempt supporting organization or donor-advised fund but maintains control over the assets or income. Contributions of non-cash assets continue to be an area of abuse, especially with regard to overvaluation of contributed property. In addition, the IRS is noticing the return of private tuition payments being disguised as charitable contributions to religious organizations.

11. Form 843 Tax Abatement: This scam rests on faulty interpretation of the Internal Revenue Code. It involves the filer requesting abatement of previously assessed tax using Form 843. Many using this scam have not previously filed tax returns and the tax they are trying to have abated has been assessed by the IRS through the Substitute for Return Program. The filer uses the Form 843 to list reasons for the request. Often, one of the reasons is: "Failed to properly compute and/or calculate IRC Sec 83-Property Transferred in Connection with Performance of Service."

12. Frivolous Arguments: Promoters have been known to make the following outlandish claims: the Sixteenth Amendment concerning congressional power to lay and collect income taxes was never ratified; wages are not income; filing a return and paying taxes are merely voluntary; and being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy. Don't believe these or other similar claims. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

IRS Still Watches Scams That Fall Off the List

Five of last year's Dirty Dozen tax scams rotated off the list for 2007. While the IRS has seen a decline in the occurrence of some of these scams - abusive credit counseling agencies, for example - other problems, such as offshore abusive transactions continue to be an area of particular concern for the agency. The absence of a particular scheme from the Dirty Dozen should not be taken as an indication that the IRS is unaware of it or not taking steps to counter it.

How to Report Suspected Tax Fraud Activity

Suspected tax fraud can be reported to the IRS using IRS Form 3949-A, Information Referral. Form 3949-A is available for download from the IRS Web site at, or by mail by calling 1-800-829-3676. The completed form or a letter detailing the alleged fraudulent activity should be addressed to the Internal Revenue Service, Fresno, CA 93888. The mailing should include specific information about who is being reported, the activity being reported, how the activity became known, when the alleged violation took place, the amount of money involved and any other information that might be helpful in an investigation. The person filing the report is not required to self-identify, although it is helpful to do so. The identity of the person filing the report can be kept confidential. The person may also be entitled to a reward.

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Body Language: A Secret To Workplace Success

Carmine Gallo

Let's say you're all set for your big interview—the one you're confident will change your career. You know you can wow the person across the desk with your accomplishments. Or you're ready to give the presentation that reflects months of hard work and success. But before you even open your mouth, the rest of your body has already spoken volumes.

What does your body language say? Does it say you're confident, smart, and enthusiastic—or just the opposite?

Only a small percentage of communication involves actual words: 7%, to be exact. In fact, 55% of communication is visual (body language, eye contact) and 38% is vocal (pitch, speed, volume, tone of voice). The world's best business communicators have strong body language: a commanding presence that reflects confidence, competence, and charisma.

One problem with body language is it may not convey what you really feel. For example, keeping your hands stiffly by your side or stuck in your pockets can give the impression that you're insecure—whether you are or not.

Avoiding looking at people—maybe simply because you're too busy consulting your notes or your résumé—can lead people to think you're being less than honest with them. You may be slouching because you're tired, but people may read it as a sign that you're not interested.

Conversely, strong and effective body language can help establish an immediate rapport with your audience, signaling confidence in your message. Look at photographs of Ronald Reagan. He carried himself impeccably even on the back of a horse at his ranch. He had an aura of confidence, optimism and power.

The Eyes Have It

People want to feel special. They want to feel as though you are speaking to them directly or that they are the most important person in the room during your conversation. Breaking eye contact is a surefire way to break the connection.

During presentations, mentally split the room into thirds. Address some of your comments to one side of the room, turn your attention to the middle, and then look to the last section. Pick out one person in each section and direct your comments toward that person. The people surrounding that person will think you are making direct eye contact with them.

Maintaining eye contact throughout your presentation requires preparation. The material on your slide should be committed to memory; otherwise you will be stuck reading instead of connecting. Make sure you know what's in your résumé or notes so you're not constantly referring to them.

Don't let anything come between you and your listeners. Crossing your arms, standing behind a podium or chair, or talking to someone from behind a computer monitor are all examples of blocking, which prevents a real connection from taking place.

Think openness. Remove physical barriers—podiums, computers, chairs. Even a folder on a desk can break the connection and create distance.

Animate Yourself

When you're speaking, let your hands do some of the talking. Great speakers use hand gestures more than on average. A professor who studies body language once told me that complex gestures—two hands above the waist—reflect complex thinking. Gestures give the listener confidence in the speaker.

Try this: Watch people such as Bill Clinton, Colin Powell, Barack Obama, Tony Blair or any number of charismatic speakers. You will immediately begin to notice that they punctuate nearly every sentence with a hand gesture. C-SPAN carries weekly debates between British Prime Minister Blair and members of the House of Commons. Watch it once and you will never doubt the importance of effective hand gestures.

And move the rest of your body, too. Great speakers move around the room, pointing to a slide instead of reading from it, placing their hands on someone's shoulders instead of keeping their distance. Don't animate your slides—animate your body!

Stand—or sit—tall. Poor posture is often associated with a lack of confidence or a lack of engagement or interest. For example, during a job interview, leaning back in your chair can give the impression that you're lazy, unmotivated, or dispassionate about the position. Keep your head up and back straight. Lean forward when seated. By sitting toward the front of your chair and leaning forward slightly, you will look far more interested, engaged, and enthusiastic.

It's All Learnable

I once worked with a client preparing for a major presentation to his company's largest investors. His body language was a mess—eyes cast downward, hands awkwardly tucked in his pockets, swaying back and forth. This guy was a poster boy for poor body language. He seemed insecure and out of his league.

By showing him a videotape of what he looked like and working on eye contact, hand gestures, animation, posture and staying open, this executive went on to rock the house during his presentation. He made solid eye contact with everybody in the room, he pulled his hands out of his pockets and used purposeful, assertive hand gestures. His posture and stance exuded power, confidence, and competence—he had charisma.

So work on your body language. Pay as much attention to it as the words you use, and watch your influence soar!

Copyrighted, Business Week. All rights reserved.

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Warrants Issued To Search Tax Prep Business Following Phone refund Abuses

Requests for exorbitant phone tax refunds has prompted the Internal Revenue Service to send special agents into seven cities to execute search warrants at tax prep businesses.

According to affidavits filed in federal court, the agency is seeking evidence from preparers suspected of filing returns on behalf of clients that requested “egregious amounts” for this year’s special telephone excise tax refund.

Investigators served warrants at tax businesses in Riverside, Calif.; Dallas, Tyler and Athens, Texas; and Atlanta, Miami and New Orleans. The special agents temporarily closed the businesses, seizing computers and documents to use in their investigations. Along with carrying out enforcement action in those seven cities, the IRS said that other tax preparers across the nation who are preparing questionable telephone tax refund requests began receiving visits from IRS auditors and special agents last week.

Potential abuses aside, out of early filers the IRS said that nearly one in three are failing to request the special refund.

To make the refund easier to calculate, the government established a standard refund amount, based on personal exemptions, ranging from $30 to $60. Some return preparers are requesting thousands of dollars in refunds for their clients -- in some cases suggesting that the taxpayer paid more for telephone service than they received in income. In several instances, taxpayers requested a refund of $30,000. Other requests appear to be for the entire amount of the taxpayer’s phone bill, rather than just the 3 percent long-distance tax.

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How To Choose A Tax Preparer carefully

McClatchy-Tribune News Service

While computer-based tax preparation products have simplified the tax return process, many people still prefer to have their taxes done by a professional tax preparer.

Like doing taxes, the process of selecting a tax preparer requires time and careful consideration.

Most tax preparers come with good credentials. But there are some who are less that reputable.

When considering using a tax preparer, the American Bar Association suggests these tips for consumers:

_ Avoid tax preparers who guarantee a refund. Only the Internal Revenue Service can determine whether an individual or couple can receive a refund.

_ Skip the services of a preparer who promises a bigger refund than anyone else. Every preparer should come up with substantially similar numbers when returns are done the right way.

_ Don't use a preparer who asks you to sign a blank return.

_ Avoid a preparer who requires that the refund be mailed directly to him or her.

_ Never use a preparer that charges a percentage of a refund as a preparation fee.

If you have questions or doubt about a tax preparation service, it might be worth it to contact the local Better Business Bureau to learn if any complaints have been lodged against the preparer.

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Refinancing Can Relieve Your Car Payment Burdens

It is not uncommon for car owners to find themselves in a situation where their car payments become a bigger financial drain than they anticipated. This can happen for many different reasons: job loss, sudden unexpected expenses, or simply because the car payments aren't in line with income.

But rather than risk having your car repossessed, or missing a few car payments and ruining your credit rating, consider refinancing your auto loan at a lower interest rate. "Many people don't realize that you can refinance your auto loan just like you can refinance your mortgage," says Chris Brown, CEO of rateGenius, an online resource for doing just that.

When you refinance, you will get a new lender for an existing loan, often for a better rate. You can also extend the payment term, skip a few payments, add or remove a co-applicant and add products (such as GAP insurance and extended warranties) to a loan.

Auto loan refinancing works very much like home refinancing, with one big difference - with the exception of a title transfer fee required by law, there are no costs for the consumer. "With a mortgage refinance, you pay a lot of fees," notes Brown. "There's a loan origination fee, closing costs, points, inspection costs. Those fees can really add up and eat into the financial benefits of refinancing."

Take a few minutes to apply for auto refinancing by visiting, or over the phone via the company's toll free number. A loan adviser then compares offers from the company's network of lenders to find the best deal for your individual situation. rateGenius has partnered with numerous lending institutions that provide customers with one of the most financially stable and diverse lending networks in the industry. The entire process can be completed in 24 to 48 hours.

In some cases, the company is able to arrange loans that allow up to 90 days with no payments. The savings consumers will see vary, but can be substantial. For example, if you have a $30,000 loan payable over 60 months at 12.5 percent interest, your monthly payment will be $674.95. By refinancing with rateGenius at a new interest rate of 7.5 percent, your monthly payment will drop to $601.14.

"Your process and customer service was excellent," says J. Cottrell, a customer from Arlington, Texas. "I would rate your service a 10. The turn around time of my package and willingness to answer my questions really bolstered my confidence that I was with a first class organization. If I ever have another financing need or could refer you future business, I will."

The company has been in business since 1999 and has brokered over 27,000 loans. To find out how much you can save, visit or call (866) 439-5533.

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Putting A Value On Your Life Insurance Policy

In August 2005, the Treasury issued final regulations under Internal Revenue Code Section 402(a) that define how to value a life insurance policy when it is distributed from a qualified retirement plan. Correctly applying these regulations provides taxpayers with a safe harbor value that will be acceptable to the Internal Revenue Service.

It is reasonable to postulate that these regulations can be used for all life insurance valuations involving tax issues and receive the same safe harbor treatment. Taxpayers are not required to use these regulations in a valuation situation, but alternative valuations could be challenged by the Service, which could result in tax deficiencies and other possible penalties, especially when associated with a qualified retirement plan.

Permanent life insurance can be very complicated and has often been the asset du jour in various tax-avoidance schemes, including abusive 412(i) qualified retirement plans and so-called welfare benefit plans. Slick tax-avoidance plan developers and enabling tax professionals spread the notion that the 402(a) regs have changed the rules in the middle of their game. Many claim that 412(i)s funded with springing cash value policies and so-called pension rescue life insurance purchases were completely legitimate until these regulations and then "wham!," an out of control Treasury put an end to their creative use of these loopholes.

Au contraire--the Service has never accepted the notion that an asset can be worth X when used for tax measurement purposes and then have its value go up at vast multiples of what that market would otherwise return. For example, a 412(i) plan I reviewed several years ago claimed that $310,000 was the appropriate value for a life insurance policy when distributed from the 412(i) and five years later would be worth $1,585,014, which is a 39% compound return.

Regardless of claims made by the sellers of tax-avoidance schemes and the new regulations, the truest measure of a life insurance policy should be its fair market value, defined as a price willing buyers and sellers, having similar information, will agree upon. Certainly no reasonable person would conclude that an asset that will be worth $1,585,014 in five years has a $310,000 value today. Only slick tax-avoidance developers (in cooperation with several life insurance companies) and tax professional defenders made such assertions. No doubt it was the perpetrators of such blatant tax-cheating that forced the Treasury to craft the strict standards within these regs.

The problem is that valuations performed under the safe harbor of these regulations are quite punitive and in many instances, in my opinion, do not reflect a policy's fair market value. Valuations under these regs are determined with reference to a policy's accumulation or account value, which is generally the premium payment less policy charges plus interest. This account value is reduced by a surrender value factor that has a significant limitation in establishing its safe harbor value.

A recent valuation my firm did for a pension distribution had a safe harbor value of $265,208, while we calculated that its market value would be $172,605. The difference is due to how most life insurance policies camouflage their first year selling expenses.

Many policies use an account value that is determined without regard to the true first year selling expenses, probably to hide from buyers how large the commissions are. This account value is subject to a large surrender charge with the difference between them being a policy's cash surrender value. The account value dramatically overstates a policy's intrinsic value but these new regs severely limit factoring in the interplay of surrender charges, and this is why they often overstate a policy's market value.

To establish a policy's market value we first calculate its asset share, which tracks money into and out of the policy to the date of valuation. We determine whether the insured's health is about the same as when the policy was acquired and other factors that could affect a policy's value, such as the financial strength of the insurance company. None of these factors are used in the regs for determining the safe harbor value.

If no adjustments are needed to the asset share, we test how this policy will perform in the future based on appropriate mortality and expenses, and interest crediting that is compared with an in-force illustration for the policy. If no quirks are noted, we can conclude that the asset share is the policy's market value. This is the amount we would advise a seller or buyer to settle on.

If an insured's health has deteriorated more than the passage of time would expect, the insurance company has dismal financial strength or some other pertinent issue is evident, this will have a direct impact on the policy's market value. Significantly, the new regulations don't take into account the insureds' health or other factors. This can mean that the safe harbor valuation will be lower, and sometimes much lower than what we would consider the more accurate market value.

We explicitly advise clients that the value determined under the safe harbor regulations will be accepted by the Service without question, while our market value could be challenged and may need to be defended. The decision to use one or the other will depend on the amount of the valuation difference, for what purpose it will be used, and how willing the client is to fight if necessary.

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Mortgage Crisis? Act Now to Avoid Foreclosure

Fred Yager

Steps You Can Take to Avoid Losing Your Home and Ruining Your Credit

Are you one of the millions of homeowners who went for one of those enticing variable or adjustable rate mortgages only to see your monthly payment, which started off low, continuing to rise, escalating to the point where it's harder and harder, or even impossible, for you to keep up your payments?

Unfortunately, this is an all-too-common scenario being played out across America.

According to the Mortgage Bankers Association (MBA), an estimated $1.5 trillion in adjustable rate mortgages (ARM) are going to see another increase in interest rates this year alone. The MBA predicts this will prompt homeowners to refinance about $700 billion worth of those adjustable rate mortgages.

Skyrocketing adjustable rate mortgages are one of the reasons that foreclosures have been on a steady increase. says foreclosures in the U.S. were up 42 percent in 2006 from the previous year. Overall, one foreclosure was filed for every 92 U.S. households last year. The Detroit-Dearborn area had the most foreclosures-one for every 21 households.

Fortunately, there are less damaging solutions than a foreclosure -- such as refinancing or even filing for a certain kind of bankruptcy. So before you put in a call to your local loan shark take a look at some better options that don't come with a clause for "kneecapping."


The first and possibly best option to consider is refinancing. Today, if you qualify, you can actually switch to a fixed-rate loan for nearly the same interest rate as an adjustable. This means the interest rate on the loan stays the same for the life of the loan and you no longer have to worry about rising interest rates.

The problem is that an increasing number of homeowners can't do that without forking over something called a "prepayment penalty," costing thousands of dollars.

These penalties tend to apply to those adjustable-rate mortgages that have low teaser rates that balloon up once the introductory period ends as well as option-adjustable rate mortgages where you can make interest-only payments or in some cases even less than interest-only.

Another obstacle to refinancing is the current slump in the housing market where values of some homes have decreased to below their purchase price. This has lenders tightening credit standards, thus making mortgages as well as refinancing harder to get.

A survey conducted by the Federal Reserve Board found that 15 percent of all U.S. banks have tightened their credit standards on residential mortgage loans in the past three months. That's the highest percentage of banks since the early 1990s.

This means some lenders are demanding proof of income, minimum credit scores, and at least some kind of down payment.

Banks aren't the only institutions clamping down. Some mortgage companies that built their reputation on lending to those with less than stellar credit ratings are discontinuing some so-called "exotic loans" that allowed homeowners to borrower 100 percent of the purchase price.

Most Lenders Want to Avoid Foreclosure

One thing to understand when faced with a possible foreclosure is that the banks or mortgage companies don't want it any more than you do.

They lose money too because houses sold in foreclosure often sell for less than the amount left on the mortgage. So they'll usually work with you to come up with an alternate solution. For example, Bank of America is allowing some borrowers with high interest adjustable rate mortgages to refinance into a different loan at no cost.

It's up to you, however, to contact your bank or mortgage company to see if refinancing with another loan is even possible. The sooner you do this, the better. Some states have foreclosure laws that give you more time than others.

However, if you live in Texas, you have less than a month to make an overdue payment before the foreclosure process begins.

Modify Your Current Loan

If refinancing isn't available, try to work out a plan with your lender to modify your current loan that would allow you to make either a smaller payment, or to miss a payment until you have the funds.

This option is possible if you can prove that you will have money coming in the future, such as from an anticipated tax refund, an inheritance, a bonus, or any other future income, or from payments you are owed for work you've already completed.

You will have to prove the money will be forthcoming. Your lender may insist this be done by a certain date.

Another possibility would be to modify the loan to spread out past money-due by adding portions of it to the regular monthly payment until your payments are up to date.

Sell Your Home

If foreclosure is on the horizon, and refinancing or modifying your loan is out of the picture, there's another possible solution before filling for bankruptcy: put your home up for sale.

Even if you can't get the full market price, it's better than the lender repossessing the property, in which case you'll get nothing.

Obviously, time could be a factor here. If you are being forced to sell your home to avoid foreclosure, you might not be able to wait for a better offer as you could do if you were not racing against the clock.

There are other factors besides time that will influence what price you could get, e.g. how much in demand your particular community is right now, the condition of your house, or even the type of house you are selling.

Some lenders, in order to avoid foreclosures, are offering to let you sell the property for less than the total amount due on the mortgage and then forgive the remaining debt. But it will depend on whether this option would cost the lender less than foreclosing. If you consider this option, borrowers have the added advantage of not having to put a foreclosure on their credit report.

Will Mortgage Insurance Help?

If you think that private mortgage insurance you had to buy because you put less than 20 percent down is going to help you avoid foreclosure, forget it. You may have paid for this insurance, but it's the lender who benefits, not you.

That's because mortgage insurance is paid out to a lender when it can't recover its costs after foreclosing on the loan and selling the mortgaged property. You still lose everything.

Beware of "Rescue" Scams

There are predators out there taking advantage of homeowners who are facing foreclosure. They pretend to offer foreclosure rescue services, often for a fee, and end up robbing you of your house and home.

One such scam is called "equity skimming" whereby a phony buyer offers to pay off your mortgage if you agree to move out and give him or her the deed to your property. The buyer will then sometimes rent out the property. But what he or she doesn't do is make any mortgage payments so eventually the lender is forced to foreclose.

Other scam artists will offer to provide, for a fee, things you can do on your own for nothing, such as working out a new payment plan with your lender.

Legitimate Foreclosure Services

There are legitimate organizations that help financially strapped homeowners avoid foreclosure and most of them are certified by the U.S. Housing & Urban Development [HUD] Department.

One of them is the Home Ownership Preservation Foundation [HPF]. It works with people nationwide to help homeowners set up budgets and mortgage payment plans. You can all them at 1-888-995-HOPE or go to their website at

The Bankruptcy Option

If all other options are exhausted, and the only thing standing between you and foreclosure is to declare personal bankruptcy, enter this financial arena with caution. Also keep in mind that filing for personal bankruptcy could cost from $1,500 to $5,000.

There are two kinds of bankruptcy so make sure you choose the right one.

Chapter 7 erases all debts including your mortgage. But that doesn't stop your lender from putting a lien on your house and foreclosing which means you can be out on the street within weeks depending on your state's foreclosure law.

Chapter 13 reorganizes your debts. You still have to pay off your debts but you'll have three to five years to do so. This gives you extended time to pay off those mortgage payments you missed, and it allows you to continue living in your home under a new mortgage payment schedule.

Don't try to file bankruptcy without a lawyer. The forms you can buy online are not adequate. If you qualify, you may be able to get reduce-fee or even free legal counsel from Legal Aid or other not-for-profit organizations in your community.

You can also call your local Bar Association and inquire about attorneys who will work "pro bono" (free) or at a reduced rate for clients in true financial distress.

A word of advice: Don't ask for free legal advice unless you are truly desperate. Contrary to popular opinion, lawyers have to eat too.

Heading Off Foreclosure

Admitting you're in financial trouble is hard for most people. But don't let it stop you from taking action as soon as you think you may be facing difficulties when it comes to keeping up with rising adjustable rate mortgage payments.

Don't think you're the first person to hit a rough spot. Nearly all of us have been there. Don't be shy about asking for help.

As noted earlier, most lenders want to avoid foreclosure as much as you do. Work with them. Get help from legitimate agencies to manage your debt. And remember, there are options to avoid foreclosure. Use them.

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IRS to Waive Tax Penalty for U.S. Citizens Working Abroad

The Internal Revenue Service and U.S. Treasury have released guidance on the estimated tax penalty for citizens or residents of the United States living and working abroad.

The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), enacted in May 2006, changed the maximum amount of foreign earned income and housing costs that may be excluded from gross income under section 911 of the Internal Revenue Code.

TIPRA increased the maximum amount of foreign earned income that may be excluded from gross income to $82,400. The law also limited the amount of housing costs that may be excluded or deducted under section 911. TIPRA further provides that the tax applicable to income not covered by the foreign income exclusion will now be calculated as though the exclusion had not been elected. These changes are effective for taxable years beginning after December 31, 2005.

Because these changes are retroactive to the beginning of the taxable year, persons relying on the law as it existed prior to the enactment of TIPRA may have underpaid their estimated tax liabilities for 2006 and may be liable for an addition to tax under section 6654(a). The IRS will waive additions to tax under section 6654(a) to the extent that the underpayment is attributable to the changes enacted under TIPRA.

This waiver is only available to qualified individuals who file a Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion, with their timely filed Form 1040, U.S. Individual Income Tax Return, or Form 1040X, Amended U.S. Individual Income Tax Return.

About 300,000 individual taxpayers filed Form 2555 and Form 2555-EZ for tax year 2004, the latest year for which data is available.


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Flaherty Pleased Banks Waiving War Clause For Soldiers' Mortgage Insurance

Alison Auld,

Canadian Press

Many banks operating in Canada have decided to waive a controversial exclusion clause in their mortgage policies that was making it difficult for widows of Canadian soldiers killed in Afghanistan to collect on their insurance.

The Canadian Bankers Association said Tuesday it surveyed its members to find out if they applied an act-of-war clause on their mortgage insurance and found they have chosen to remit them for Canadian Forces personnel serving in Afghanistan.

Spokeswoman Maura Drew-Lytle said it's not clear how many banks actually have the clause in their policies, but it appears most do not.

"We have gone to the banks, as this has come up, and they've certainly told us that they will waive it," she said from Toronto.

Finance Minister Jim Flaherty announced in the House of Commons on Monday that he had sent a letter to banking officials, asking that they clarify the industry's position on the issue.

In response, the association said its members will not "refuse to pay a claim on a mortgage life insurance or a mortgage disability policy because the insured died or was injured while serving in Afghanistan."

Flaherty said he was pleased with the position, but will continue monitoring the situation to make sure widows are getting the payments he says they deserve.

"They absolutely did the right thing and I'm sorry the issue came up in the first place, quite frankly," he said in an interview Tuesday after the issue was again raised in the House.

"The financial institutions have straightened this out."

Flaherty raised the question after media reports suggested widows of soldiers killed in Afghanistan were told by their banks or insurance companies that the mortgage insurance they'd spent years paying into didn't apply because their spouses died in combat.

Maureen Gillam, whose husband, Sgt. Craig Gillam was killed last October in a rocket attack near Kandahar, said she received a letter last week stating she could not benefit from her mortgage insurance because of an act-of-war clause.

However, hours after a reporter questioned Manulife Financial about the issue, the institution reversed its position and determined it would pay off the mortgage.

Others have found the process of figuring out whether their mortgage is covered to be confusing and fraught with mixed messages.

Kendra Mellish, whose husband Warrant Officer Frank Mellish died last September in a firefight in Afghanistan, said she was initially told she would likely not be able to collect on her mortgage insurance because of a war exclusion clause.

She pursued the issue with officials at the Bank of Montreal and, months after she continued to pay the mortgage, was informed the bank had no such exclusion clause and would begin payments.

In another case, Cpl. Kelly Dove said she was initially told by Scotiabank that her mortgage would not be paid after her husband, Warrant Officer Rick Nolan, died last September.

But after Christmas, the bank informed her the mortgage would in fact be covered.

The bankers association represents 54 chartered banks operating in Canada, and provides about 60 per cent of the residential mortgage market.

Drew-Lytle said there are other companies that provide residential insurance that are not represented by the association.

The Defence Department also offers life insurance from the government to cover debts up to $400,000 in case of death while in service.

Flaherty said he planned to raise the issue of insurance when he meets with military officials in the coming days.

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Internal Revenue Service Prosecution - Paramount Man Faces Prison For FIling False IRS Claims

A Paramount, California man, who admitted to filing a false or fraudulent claim with the Internal Revenue Service, faces up to five years in federal prison and a fine of up to $250,000 for his actions.

In his plea agreement, Nicholas Henderson, 34, admitted to filing at least 57 false or fraudulent claims for income tax refunds with the Internal Revenue Service. Henderson filed false 2001 through 2003 federal income tax returns claiming refunds which he knew the individual named as the filer of the tax return was not entitled to receive. To accomplish this, Henderson used of false Forms W2, fraudulent claims for education credits, fabricated employers, false dependent information, and claimed earned income credits to which the named filers of the returns were not entitled to create returns that resulted in refunds. In total, Henderson caused at least 57 false and fraudulent returns to be filed, claiming refunds from the Internal Revenue Service totaling at least $199,917 to which neither Henderson nor the named filer of the fraudulent income tax return was entitled.

In addition to facing a prison sentence, Henderson has agreed to forfeit to the government approximately $122,135 in cash that investigators seized from his residence and safe deposit boxes as a part of the investigation. In addition to the forfeiture of the seized cash, Henderson has agreed to make full restitution to the government for the losses his conduct caused. Henderson set forth in his plea agreement that the actual losses his scheme cost the government was at least $199,917.00.

Sentencing for Henderson is scheduled for June 4, 2007 before United States District Judge Dale S. Fischer in Los Angeles. This case is the result of an investigation conducted by agents of the Internal Revenue Service’s Criminal Investigation Division in Los Angeles.

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Taxes can be paid by electronic system

If you owe taxes when you file your federal tax return, you can pay electronically using the Electronic Federal Tax Payment System. The system is a free, secure service provided by the Department of Treasury, according to an Internal Revenue Service news release.
The system can be used by businesses and individuals and can be accessed via phone or the Internet.
Payments include corporate, excise and employment taxes as well as your 1040 quarterly estimated tax payments. You can schedule payments up to 365 days in advance of the due date as an individual or up to 120 days in advance as a business.
Scheduled payments can be canceled up to 48 hours before the scheduled payment due date, the release said.Payments are acknowledged immediately with a receipt and help help is 24 hours a day, seven days a week.
After you enroll in the system, you will receive a confirmation package by mail. A separate mailing will include your personal identification number and instructions for activating your account.
Employers who apply for and receive a new Employer Identification Number and have a federal tax obligation are automatically enrolled in the system’s ExpressEnrollment to make their Federal Tax Deposits.

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IRS scrutinizing telephone refund requests


The Internal Revenue Service is taking additional steps to prevent abuse by tax preparers and help taxpayers make accurate requests for the one-time telephone excise tax refund.
This week, IRS Criminal Investigation special agents and IRS revenue agents are conducting special site visits with tax preparers across the nation to prevent inflated requests made for the one-time telephone tax refund. Visits began last week to 22 tax preparers, who have handled more than 1,500 tax returns.
"We are taking this unusual step to confront blatant abuse of this important refund program," said IRS Commissioner Mark W. Everson. "We want tax preparers to prepare accurate tax returns. If they don't, we will move swiftly to impose civil penalties and, where warranted, seek criminal sanctions."
The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. The IRS also authorized a one-time refund of the federal excise tax collected on service billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006. The tax continues to apply to local-only phone service.
The IRS has monitored telephone excise tax refund requests for potential problems since the tax-filing season opened in early January. The IRS has seen some problems with returns from tax preparers that may indicate criminal intent.
Some tax preparers are requesting thousands of dollars of refunds for their clients in instances where clients are entitled to only a tiny fraction of that amount. In some cases, taxpayers requested a refund so large that their phone bills would have had to exceed their income. In several instances, taxpayers requested a refund of $30,000 -- hundreds of times more than what could be reasonably expected. Some refund requests appear to be for the entire amount of the taxpayer's phone bill, rather than just the three-percent long-distance tax.
Taxpayers who request more of a refund than they are entitled to will have their refunds held and may be subject to an audit.
To make the refund easier to figure, the IRS established a standard refund amount, based on personal exemptions, ranging from $30 to $60. If taxpayers have phone bills and other records, they can request the actual amount of excise tax paid. Though using the standard amount is optional, it is easy to figure and approximates the eligible amount for most individual taxpayers. You have to fill out only one line on your return, and you don't need to present proof to the IRS.
At the same time, the IRS has issued a new reminder to taxpayers that they may qualify for the refund. More than a third of early filers this year did not request the telephone tax refund. Other taxpayers are making mistakes when requesting it.
The best and most reliable information on this refund can be found in the Telephone Excise Tax Refund section on the front page of, the tax agency's popular Web site. Here, taxpayers can download forms, find answers to common questions and link to participating private-sector Free File partners offering free electronic-filing services.

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The dos and don'ts of income-tax deductions

Find the Deduction is a game with constantly shifting rules. Each year Congress changes something in the tax law, the Internal Revenue Service issues opinions, and tax courts make their rulings. If you like a challenge, learning this year's deduction options is like a game of chess. If not, it's a tedious round of hide-and-seek. But either way, it's worth knowing the rules.

Charitable donations. Do keep a receipt for every donation--cash or not cash--worth $250 or more made after Aug. 17, 2006. And here's a quirk: Multiple smaller donations to the same charity don't require them. So several $249 donations to the same charity would not require receipts. The rules change again for tax-year 2007; you will need receipts for all cash donations, regardless of value.

Don't itemize donations of furniture, clothing, and other goods that weren't in at least good condition when you gave them. A new IRS rule aims to weed out junk donations, though at the time of this writing, the agency hadn't yet defined "good" condition. Until then, use your judgment.

Medical expenses. Do deduct premiums for the Medicare Part D prescription drug insurance program, as well as other health-insurance premiums you pay yourself. The premiums for long-term-care insurance are deductible on a sliding scale according to your age.

Do read the IRS list of deductible medical expenses (see Publication 502 under More Forms and Publications at The following costs, for example, are deductible to the extent they address a health issue: wigs recommended by a doctor for mental health or to cover hair loss caused by disease; special mattresses and bed boards; back supports; elastic hosiery; childbirth classes, and remedial reading instruction for dyslexic children.

Don't expect much. You can only deduct unreimbursed medical expenses that exceed 7.5 percent of your adjusted gross income. If you are subject to the Alternative Minimum Tax, the floor is higher: 10 percent. (If you're self-employed, your health-insurance premiums may be 100 percent deductible. See Publication 502 for eligibility criteria.)

Retirement accounts. Do contribute to an IRA if you're eligible. Taxpayers under age 50 can put in up to $4,000; those 50 and over can sock away $5,000. For 2006, if you're covered by a retirement plan at work, your deduction for contributions to a traditional IRA will be phased out if your AGI is more than $75,000 but less than $85,000 for joint filers. You have until the filing deadline to make a contribution.

Do fund a SEP IRA if you made money from self-employment last year. You are eligible even if you held another job and contributed to a 401(k) there.

Extended deductions. Do check the IRS Web site for Publication 553, which outlines popular deductions that were reinstated by Congress late last year.

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