Keepingitreal

White House Moves To Extend Safety Net for Unemployed

On Saturday, President Obama said his administration would "explore additional options to promote job creation." And yesterday, the president's economic team batted around lots of ideas. The concern is only natural. After all, unemployment, which hit 9.8 percent Friday, is keeping Democrats up at night with visions of the easy attack ads they'll have to face from Republicans during next year's midterm election. Now they're looking into several options that would inject the economy with some quick stimulus to try to promote job creation, including a tax credit for new hires, which lawmakers once rejected because of worries that it would be too easy to manipulate, and allowing companies to deduct five-year operating losses rather than two, a measure that is currently available only for small businesses. In the meantime, Democrats are also looking into extending through next year additional unemployment and health benefits for those who are out of work for a long period of time, which could cost up to $100 billion. It's also likely that Democrats will approve extending the $8,000 tax credit for first-time homebuyers. These measures are unlikely to culminate as a new stimulus package, primarily because Democrats know it would open them up to criticism that the original $787 billion package was ineffective. And the truth is that original package still has a long way to go, as more than half of its money still hasn't been released.

Read original story in The New York Times | Tuesday, Oct. 6, 2009

Shop around for the best cheap checking accounts

The news that Wal-Mart's going to cease cutting paper checks for employees who don't have direct deposit has prompted all sorts of reactions -- applause for reducing paper waste, debates over whether ATM fees are more or less ruinous than check-cashing fees and confusion over why people just don't have bank accounts into which to deposit their checks. The short answer: Because free bank accounts usually come with strings attached. In poking around bank options in the Bay Area, here are the terms for "free" checking from the big ones:

Bank of America -- The MyAccess checking account waives its $8.95 monthly fee if you either have a "qualifying" direct deposit made to your account once a month, or you maintain an average daily balance of $1500 in the checking account. Otherwise, it'll cost you $107.40 per year for the privilege of keeping your money here. However, if you take advantage of the online-only Charitable Causes accounts, you can open a free checking account with no minimum balance, no direct deposit and no fees.

Bank of the West -- Its free checking program doesn't list a minimum average daily balance -- all you apparently need is $100 to open the account.

Citibank -- Its EZ Checking account requires $100 to open, and in order to waive the $9.50/month fee, users have to do one of three things: make two monthly bill payments online; maintain an average minimum balance of $1500 across any linked checking and saving accounts; use direct deposit for the account.

Chase Bank -- While the website claims there are currently no products available in California until they finish the Washington Mutual takeover, when I popped in a Washington State zip code and took a quick visit to their Chase Checking page, here were the terms I found. For free checking, you'd need $25 to open an account. To avoid the $6/month fee, you've got to make five different debit card purchases or have direct deposit; there's no stated minimum average monthly balance.

First Republic -- According to their site, this bank offers an "ATM Rebate Checking" account, and that appears to be it. This interest-bearing checking account charges $15 per month in fees ($180 per year) unless you maintain a minimum average monthly balance of $2500. You need $500 minimum to open the account. I downloaded and read through their account disclosure statement and it appears that the big perk to this account is that First Republic won't charge you fees for using non-network ATMs. That doesn't mean other banks won't tack on their own fees, though.

US Bank -- Its free checking requires $50 to open the account, but there's no required minimum average daily balance.

Wells Fargo -- The bank's most basic checking account requires a $100 opening deposit, and it'll waive the $5/month fee if you maintain a $1000 minimum daily balance or you've got direct deposit.

And then there's the issue of bank fees: Bank of America's upped its overdraft fees, as have Citibank and Wells Fargo, and according to Bankrate.com, banks have boosted their ATM fees.

Here's how the main banks around here shake out for fees:

Bank of America -- Overdraft fees will run you $35 per transaction (with a limit of 10 overdraft items per day, or $350), and ATM fees will run you $2 per each non-BofA transaction.

Bank of the West -- Use your Bank of the West card at a non-bank ATM and they'll charge you $1.50 per use. Overdraft fees are $26 per day for the first insufficient-funds transaction and $35 per each item after that.

Citibank -- For overdraft protection: "Citibank will charge an Overdraft Protection Transfer Fee of $10 each day we cover an overdraft by transferring money," and that's on top of its $34 overdraft fee per item. Citibank's pretty cagey about whether they'll charge customers fees for using non-Citi ATMs, choosing to focus instead on the possibility that they might reimburse you the fees other banks charge for using their machines.

Chase Bank -- ATM fees are $2 per transaction from Chase if you use any non-Chase ATM. According to the site, you have to choose to sign up for overdraft protection; their overdraft fees are tiered -- $25 for the first occurrence, and more from there. (Also, good luck trying to read through the disclosures -- all the download links are broken.)

First Republic -- There is no overdraft fee listed, only a $30 fee for "insufficient funds."

US Bank -- US Bank will charge you $2 for using your ATM card at non-US Bank location. Their overdraft fees are tiered: $19.00 for the first overdraft, $35.00 for two to four, and $37.50 after that; the continuous overdraft fee (charged each day the available balance is below zero beginning, as of the fourth calendar day you're overdrawn) is $8 per day. According to the website, overdraft protection is an opt-in program with an unstated monthly fee.

Wells Fargo -- According to the fee schedule, Wells Fargo will charge you $2.50 if you withdraw money at a non-Wells Fargo ATM. Their overdraft fee is $25 for the first overdrawn occasion in a 12-month period, then $35 per each occasion after that. Wells Fargo defines an occasion as "a day in which your account does not have enough money to cover the transaction," so if you've got one overdrawn check but your account doesn't have sufficient funds for three days, you're out $90 in overdraft fees alone.

ATMs, choosing to focus instead on the possibility that they might reimburse you the fees other banks charge for using their machines.

Chase Bank -- ATM fees are $2 per transaction from Chase if you use any non-Chase ATM. According to the site, you have to choose to sign up for overdraft protection;

their overdraft fees are tiered -- $25 for the first occurrence, and more from there. (Also, good luck trying to read through the disclosures -- all the download links are broken.)

First Republic -- There is no overdraft fee listed, only a $30 fee for "insufficient funds."

US Bank -- US Bank will charge you $2 for using your ATM card at non-US Bank location. Their overdraft fees are tiered: $19.00 for the first overdraft, $35.00 for two to four, and $37.50 after that; the continuous overdraft fee (charged each day the available balance is below zero beginning, as of the fourth calendar day you're overdrawn) is $8 per day. According to the website, overdraft protection is an opt-in program with an unstated monthly fee.

 

Wells Fargo -- According to the fee schedule, Wells Fargo will charge you $2.50 if you withdraw money at a non-Wells Fargo ATM. Their overdraft fee is $25 for the first overdrawn occasion in a 12-month period, then $35 per each occasion after that. Wells Fargo defines an occasion as "a day in which your account does not have enough money to cover the transaction," so if you've got one overdrawn check but your account doesn't have sufficient funds for three days, you're out $90 in overdraft fees alone. SOURCE:SFGATE.COM

A Reluctance to Retire Means Fewer Openings

To the long list of reasons American companies aren’t hiring — business losses, tight credit, consumer retrenchment — add the fact that many of their older workers are unable, or afraid, to retire.

In other parts of the developed world, people are retiring as planned, because of relatively flush state and corporate pensions that await them. But here in the United States, financial security in old age rests increasingly on private savings, which have taken a beating in the last year. Prospective retirees are clinging to their jobs despite some cherished life plans.

As a result, companies are not only reluctant to create new jobs, but have fewer job openings to fill from attrition. For the 14 million Americans looking for work — a number expected to rise in Friday’s jobs report for August — this lack of turnover has made a tough job market even tougher.

Consider Barbara Petrucci, a dialysis nurse who had expected to stop working soon, or at least scale back to part time. Now that her family savings have been depleted by market declines, she expects to stay on the job for a long, long time.

“Retirement is kind of an elusive dream at this point,” says Ms. Petrucci, 58, who works at an Atlanta hospital while her retired husband, Ned, 61, interviews for jobs (unsuccessfully, so far). “We tease at work about someday having to go around at the hospital with our walkers.”

The diverted life plans of families like the Petruccis are an unintended economic consequence of the nation’s sprawling 401(k) plans. These private retirement savings vehicles, designed 30 years ago as a supplement to traditional corporate pensions, have somewhat haphazardly replaced the old system, like an innocuous weed that somehow overgrew the garden.

As is apparent in this downturn, the economic effects of such an ad hoc system can be perverse. In boom times, when companies need more workers, the most experienced employees may decide to retire, taking comfort in their bloated401(k)s, whose values typically fluctuate with the financial markets.CONTINUE READING..

Tax credits improving for college students

While filing your taxes is the last thing you want to think of as the remaining free days of summer tick away, now is a good time to remind your college student to start saving book receipts and keep track of other college expenses before they start spending. As part of the American Recovery and Reinvestment Act, more parents and students will qualify for the tax credit called the American Opportunity Credit for tax years 2009 and 2010, and their tax credits will increase from $1,800 under the Hope Credit, to $2,500 under the new plan. "It is a very valuable benefit. It is really about putting more money in your pocket," said Bob Meighan, vice president of tax software giant TurboTax. While the American Opportunity Credit is an extension and expansion of the Hope Credit, some taxpayers may need tax software to determine if other deductions or credits, such as the Lifelong Learning Credit, are better for them and "give the biggest bang for the buck," Meighan said. Basically, anyone paying $4,000 or more a year for college qualifies for the maximum American Opportunity annual benefit of $2,500 per student. "This presumably opens the door for kids who wouldn't be able to afford it," he said. The new credit adds books and required course materials to the list of qualifying expenses, as well as tuition and fees, and allows the credit to be claimed for four post-secondary education years instead of two. The full credit is for individuals with modified adjusted gross incomes of $80,000 or less, or $160,000 or less more married couples filing a joint return, according to the IRS. Partial credit is given to single filers making $80,000 to $90,000, and married couples making $160,000 to $180,000. The tax break is also partially refundable, allowing lower income families with little or no tax liability to claim some of the credit. CONTINUE READING..

Credit Bailout: Issuers Slashing Card Balances

The banks were bailed out last fall, the automobile companies last winter. For Edward McClelland, a writer in Chicago, deliverance finally arrived a few days ago.Mr. McClelland’s credit card company was calling yet again, wondering when it could expect the next installment on his delinquent account. He proposed paying half of his $5,486 balance and calling the matter even.It’s a deal, the account representative immediately said, not even bothering to check with a supervisor.As they confront unprecedented numbers of troubled customers, credit card companies are increasingly doing something they have historically scorned: settling delinquent accounts for substantially less than the amount owed.The practice started last fall as the economy worsened. But in recent months, with unemployment topping 9 percent and more people having trouble paying their bills, experts say this approach has risen drastically.They say many credit card issuers have revised internal guidelines to give front-line employees the power to cut deals with consumers. The workers do not even have to wait for customers to call and ask for a break.“Now it’s the card company calling you and saying, ‘Let’s talk turkey,’ ” said David Robertson, publisher of the credit industry journal The Nilson Report.Only a few creditors are willing to confirm the practice. Bank of America and American Express say they decide on a case-by-case basis whether to accept less than the full balance. Other card companies refuse to discuss the subject, but their trade group, the American Bankers Association, acknowledges that settlements are becoming more common.The shift comes as the financial services industry finds itself losing some of its legendary power. A credit card reform bill that makes it harder to raise rates on existing balances and prevents certain automatic fees flew through Congress and was signed by President Obama in late May.Borrowers still have a crushing amount of debt to deal with, however.Revolving credit, a close approximation of credit card debt, totaled $939.6 billion in March. The Federal Reserve reported that 6.5 percent of credit card debt was at least 30 days past due in the first quarter, the highest percentage since it began tracking the number in 1991. The amount being written off was also at peak levels.After a balance has been delinquent for six months, regulations require the card company to reduce the value of the debt on its books to zero. If a borrower has not paid by this point, chances are he never will.“The creditors would rather have a piece of something now instead of absolutely nothing down the road,” said Adam K. Levin, the founder of the consumer education Web site Credit.com. Banks and credit card companies are discussing new programs that would, for the first time, allow credit counselors to invoke reductions of principal as a routine part of their strategy, said Jeffrey S. Tenenbaum, a lawyer for many counseling agencies. In the past, counselors could persuade card issuers to adjust interest rates and modify late fees, but the balance was untouchable.  CONTINUE READING...

Americans pare back debt in frugality trend

After two decades of debt-financed consumption, Americans are rediscovering frugality in a shift that might improve their finances but will slow down the country's economic recovery, according to the Federal Reserve Bank of San Francisco.A report published on the bank's Web site shows that consumers doubled their debt burden over a 20-year-period that peaked in 2007, when the average household owed $1.33 for every $1 it earned in disposable personal income.A long period of easy credit allowed Americans to live beyond their means and helped boost consumer spending to roughly 70 percent of all economic activity.But now, for a host of reasons including fear of future job losses, many households have reduced debt, curbed spending and boosted savings - steps that will improve their financial pictures but reduce the flow of money in our consumer-driven economy."The subtraction from consumption growth would act as a near-term drag on overall economic activity, slowing the pace of recovery from recession," San Francisco Fed economists Reuven Glick and Kevin Lansing wrote in the report.They said that since the recession began in December 2007, Americans have brought their debt-to-income ratios down from the peak 133 percent to 130 percent.The San Francisco Fed economists think Americans could spend the next 10 years on a frugality trend that would bump their saving rate up to 10 percent of personal disposable income - it had been as low as zero in recent years - while dropping the average debt ratio down to 100 percent, or a dollar owed for every dollar of disposable income.The authors noted that many households also will end up reducing their debt burdens by going into bankruptcy or foreclosure, processes that would have other negative side effects on their own finances and the larger economy.Economists use the term "deleveraging" to describe a reduction in debt-to-income ratios, whether this is accomplished by thrifty habits or shocks like foreclosure."Either way, the process of household deleveraging will not be painless," the report said. SOURCE:SFGATE.COM

An easier way to fix your credit report

At some point in your life you, or someone you know, will find a mistake on their credit report. Disputing an error isn't all that difficult, but it can be confusing. Thankfully, Five Cent Nickel has an incredibly detailed and simple guide to disputing a credit report error. With tightened credit, new employers checking your credit report and the allure of refinancing at a lower rate, now is the time to make sure your report is error free. Not only does Five Cent Nickel show you the correct way to get your report, but details how to dispute the mistake with Equifax, TransUnion and Experian. Whether you want to file a dispute online, call the agency or dispute the matter via snail-mail, this guide shows you who to call or mail and how to do it. There's even a sample credit report dispute letter so you can fill in the blanks Mad Lib style, and get on your way to a correct and better credit report. If you think a credit report error couldn't happen to you, think again. Two years ago I found several errors on my credit report which, no surprise, were pulling my credit score down. Thankfully it was a quick and painless process to dispute them online and I didn't even need to submit additional documentation.  This article is especially useful since my in-laws are attempting to refinance their mortgage and found a Sallie Mae loan erroneously attached to their credit report. After verifying the obvious with Sallie Mae and their bank they were still left with the question of how to fix the problem, since the advice given to them was simply to go online and dispute it. Now they can just fill in the blanks and get their debt to income ratio back to normal. It can take some time, 4-6 weeks, for errors to be disputed and removed, so you should take the time to make sure your credit report is accurate and start fixing any errors you find right now. You'll be happy you did the next time you get your credit pulled; which could be sooner than you think. Source

Trick of 'magic' tax refund loans? High rates

A broad smile spreads over Magic Johnson's face. "Sooner or later, we all need help," the former NBA superstar says into the camera. "If you need cash quickly, Jackson Hewitt has the Money Now loan. It's fast, it's simple - it's money like magic." But consumer advocates say the quickie tax-refund loans Johnson is advertising prey on the working poor. These refund anticipation loans - short-term cash advances against expected tax refunds - carry hefty price tags. On an annualized basis, the interest rates range from 40 to nearly 500 percent. "These loans gouge (taxpayers) with all kinds of fees and ridiculous add-ons," said Kimberly Jones, policy advocate at the California Reinvestment Coalition. "When (low- or moderate-income) people have the right information, they can get their taxes prepared for free and receive all of the tax refund due to them." But the lure of quick cash tempts plenty of people. About 1 out of every 15 taxpayers, or 8.7 million people, opted for the tax-refund loans in 2007, costing them $833 million in loan charges and another $68 million in related fees, according to Chi Chi Wu, a staff attorney with the National Consumer Law Center in Boston, who analyzed IRS data. Almost two-thirds of the tax-refund borrowers receive the earned income tax credit, a special program for low-income working families. "This is the government's biggest anti-poverty program," Wu said. "The companies pitching tax-refund loans know there is a population of low-income folks who expect a big refund (because of the earned income tax credit). This product is really targeted to them." Refund anticipation loans are marketed by tax-preparation services, but are actually made by banks. The banks and the tax services split the fees. Jackson Hewitt, which has about 6,800 franchised and company-owned offices nationwide, declined an interview request. In a statement, the New Jersey company said: "For those that have limited or no access to traditional banking relationships and may have a need for quick access to funds to meet a timely expense, a (refund anticipation loan) may be a viable financial option, as well as a more cost-effective option when compared to seeking a cash advance on a credit card or other short-term loan option." SOURCE:SFGATE.COM

Unemployment insurance: A guide

Two bright-red phones at the Verdugo Jobs Center in Glendale are direct lines to the state offices that manage unemployment insurance, the benefit that can be a lifesaver after a layoff. But because of record unemployment levels in the state, picking one up doesn't mean you'll get through any time soon.You can streamline the process by having the following information ready before filing for unemployment benefits. • Social Security number Driver's license number • Name, address and phone number of most recent employer • Last date you worked for the employer, and your salary • Reason you are no longer working there • List of all other employers, if any, over the last 18 months. Include dates you worked at each and your wages.The basic rule: Unemployment insurance benefits -- which are funded mostly by employer payroll taxes and federal dollars -- are for people who lose their jobs through no fault of their own. And in this sorry economy, that's a lot of people. If you are fired for cause or just plain quit, the benefits could be denied. Also, an applicant usually has to have been a staff employee. "Independent contractors are not eligible," said Matthew Goldberg, an attorney at the Employment Law Center of the Legal Aid Society in San Francisco. There is a minimum earnings requirement as well. To collect benefits, you would have had to earn at least $900 in wages during a fiscal quarter in what the program calls the base period. Here's one of the points where it gets confusing -- that base period is a year long, but it skips the most recent full quarter. In other words, if you filed for unemployment benefits in January 2009, your base period would run from October 2007 through September 2008. When in doubt, it's probably easier to apply for the benefits and let the Employment Development  Department, which oversees the program in California, figure out whether you made the grade. If you're turned down for any reason, you have the right to file an appeal within 20 days to ask for a hearing. Moving out of state after a layoff doesn't disqualify you -- the program is based on wages and payroll taxes, not geography. If you move after starting to get benefits in California, simply continue to follow the rules of the program and send in your biweekly claim forms to the same office as always. If you apply after moving, the process might get a bit tricky but is usually doable. Bottom line: It's important to remember that these benefits are not just for the poor. If you are laid off and meet the requirements, you're eligible for them, even if you happen to have a gazillion dollars in the bank. CONTINUE READING...

American Express offering cardholders $300 to get lost

There was a time when carrying an American Express card gave one a sense of elevated self-importance. So how do you suppose those customers feel today when the company offers them $300 if they will pay off their balance and get lost?  The new program, offered to selected customers via a direct mail campaign, offers a prepaid American Express card with $300 on it if the customer enrolls in the program and pays off his account within two months. At that point, his existing American Express account is automatically canceled. Ouch! This is an example of the impact of new database marketing techniques that allow merchants to identify and fire 'bad' customers; i.e., those whose business is not profitable to the merchant. Included in this bucket are those who pay off their balance each month and don't take advantage of ancillary services. In other words, what the frugal person would think of as good customers.  If you don't carry a balance on your credit card, if you visit the teller window rather than the ATM, if you don't respond to line-of-credit offers, don't be surprised if you too are fired by your bank. And I'd be surprised if it offers a $300 f***-off bribe. SOURCE:WALLETPOP.COM

California Legislature passes spending plan

Voting at dawn to end a three-month impasse, the California Legislature approved a deal that Democrats and Gov. Arnold Schwarzenegger reached with a GOP holdout to resolve the state's fiscal emergency.Under the arrangement, Sen. Abel Maldonado of Santa Maria provided the final Republican vote needed to pass a spending plan with billions of dollars in tax hikes. In exchange, Democrats agreed to rewrite election rules that Maldonado said had allowed the Capitol to become paralyzed by partisanship, leading the state to the brink of financial ruin.The plan gelled Wednesday night following seven unsuccessful votes held throughout the day and into the night in the Capitol, which Sen. President Pro Tem Darrell Steinberg (D-Sacramento) had locked down Tuesday, barring senators from leaving. California's financial state had deteriorated to the point where Schwarzenegger had ordered layoffs of 10,000 state workers and the suspension of hundreds of public-works projects. Early income-tax refunds have been delayed, and public anger has grown."I'm very relieved for the people of California," Steinberg said. "There's not a lot of good news to come out of a $41-billion budget deficit, except that we in fact solved it."

The final plan incorporated most of the framework of the original budget compromise from Democratic and Republican leaders. It included billions of dollars in cuts to schools, healthcare institutions, higher education and programs for the poor. If signed by Schwarzenegger, who helped devise the package, it also would raise personal income taxes and the state sales tax, although a 12-cent per-gallon increase in gasoline taxes was eliminated in the final hours.Democrats initially said Maldonado's call for "open" primaries, in which voters could cross party lines and candidates of all parties would compete in the same primary, followed by a runoff of the top two vote-getters, was too substantial to be pushed through in a budget deal. But Maldonado said the current budget stalemate proved that California could not return to fiscal sanity without fundamental changes in the way it elects its representatives. CONTINUE READING...

Obama signs stimulus bill, readies homeowner plan

Racing to reverse the country's economic spiral, President Barack Obama signed the mammoth stimulus package into law Tuesday and readied a new $50 billion foreclosure rescue for legions of Americans who are in danger of losing their homes.There was no recovery yet for beleaguered automakers, who were back in Washington for more bailout billions. General Motors Corp. said it was closing plants, Chrysler LLC said it was cutting vehicle models and both said they were getting rid of thousands more jobs as they made their restructuring cases for $5 billion more for Chrysler and as much as $16.6 billion more for GM. The United Auto Workers union said it had agreed to tentative concessions that could help Detroit's struggling Big Three. Anything but reassured, Wall Street dove ever lower. The Dow Jones industrials fell 297.81 points, closing less than a point above their lowest level in five and a half years. Obama focused on the $787 billion stimulus plan, an ambitious package of federal spending and tax cuts designed to revive the economy and save millions of jobs. Most wage-earners will soon see the first paycheck evidence of tax breaks that will total $400 for individuals and $800 for couples. The stimulus package was a huge victory for Obama less than one month into his presidency. But he struck a sober tone and lowered expectations for an immediate turnaround in the severe recession that is well into its second year. "None of this will be easy," he said. "The road to recovery will not be straight. We will make progress, and there may be some slippage along the way." Still, he declared, "We have begun the essential work of keeping the American dream alive in our time." Underscoring energy-related investments in the new law, Obama and Vice President Joe Biden flew separately to Denver where the president signed it at the Denver Museum of Nature & Science before roughly 250 people including alternative energy business leaders. Earlier, the pair examined solar panels on the museum's roof. On Wednesday, Obama will outline another big piece of his recovery effort — a $50 billion plan to help stem foreclosures — in Arizona, one of the states hardest hit by the mortgage defaults that are at the center of the nation's economic woes. CONTINUE READING

IRS may go easier on taxpayers with hardships

The Internal Revenue Service has announced it will be more understanding and flexible toward people who can't pay their taxes because of a layoff or other hardship.The new policy was announced by IRS Commissioner Doug Shulman in early January, before Timothy Geithner was sworn in as head of the Treasury Department, which oversees the IRS. Geithner's failure to pay four years' worth of Social Security and Medicare taxes on time threatened his confirmation. Shulman's announcement referred mainly to people who already owe back taxes but an IRS spokesman said it also could apply to people who can't pay their 2008 taxes. The new policies are not designed to help chronic tax deadbeats but people "who've done the right thing in the past and are facing unusual hardships," Shulman said.There don't appear to be hard and fast rules on who will get the kinder treatment. The IRS spokesman said it will depend on the "facts and circumstances" of each case. People who can't pay their federal taxes face several options. The most common is an installment plan, in which the taxpayer agrees to pay the full amount due over time. Much less common is an offer in compromise, in which the IRS agrees to take less than the full amount. To qualify, the IRS must be convinced the taxpayer does not have the income and assets needed to pay the entire debt. Payments under this plan can be made in a lump sum or monthly, usually over two years. If a taxpayer misses a single payment on an installment agreement or an offer in compromise, the IRS can end the deal and demand the full amount due. Under the new policy, if "previously compliant individuals in existing installment agreements" can't make their payment because of a job loss or other financial hardship, "the IRS may allow a skipped payment or a reduced monthly payment amount without automatically suspending the installment agreement," Shulman said in a press release. Likewise, "taxpayers who are unable to meet the periodic payment terms of an accepted (offer in compromise) will be able to contact the IRS office handling the offer for available options to help them avoid default," he added.The IRS has shown such leniency in the past, but many did not know to ask for it. "You could usually skip a month on the installment agreement if you called in advance. On the offer in compromise, you could skip a payment, but the reasons had to be good," said Richard Boggs, chief executive of Nationwide Tax Relief. "If they're going to be more lenient, that's great." CONTINUE READING...

State furloughs may further delays for unemployment benefits

Already frustrated jobless Californians may have a tougher time getting unemployment insurance benefits of up to $450 a week as of Friday when most state workers start taking off two days a month without pay.
Over the objections of the federal government, workers handling jobless assistance claims and appeals have been ordered by Gov. Arnold Schwarzenegger to go on furlough -- even though nearly all their salaries are paid by the U.S. Labor Department, and their days off will save the state very little or no money.In a letter late last month, the department warned that furloughs could worsen the state's current "below standard performance" in meeting criteria for the timely handling of unemployment claims and appeals.Failure to comply with the department's demands could violate Social Security laws, said the letter's author, Richard C. Trigg, regional administrator in San Francisco of the Labor Department's Employment and Training Administration.The governor's office said it was unmoved by the federal concerns. The Schwarzenegger administration, which needs to fill a $42-billion budget deficit, says it has no choice but to furlough every worker it can without endangering public safety, including staff at the Employment Development Department and the Unemployment Insurance Appeals Board.
"Just like every family and business in California is doing, state government needs to tighten its belt in every way it can," said Aaron McLear, the governor's press secretary. "Savings from every part of state government will help to manage cash flow to get the state through this fiscal crisis."
Schwarzenegger administration spokeswoman Camille Anderson contended that requiring staff to take pay cuts of about 10% -- by working on unpaid days and then taking compensatory days off either later that same month or sometime before the middle of 2010 -- would not hinder claims processing or appeals.
The Employment Development Department and the appeals board have been permitted to "self-direct" their staff furloughs to avoid having to shut down all operations on the first and third Fridays of each month, when Schwarzenegger has ordered most state agencies to close, she said. The Labor Department strongly disagrees. Furloughs of people working on federally financed programs "will diminish assistance to the unemployed without saving any state dollars," said spokeswoman Jennifer Kaplan in  Washington. Failure to pay benefits in a timely fashion and provide claimants with fair legal hearings could threaten more than $500 million the federal government annually gives the state to administer unemployment insurance programs, warned Maurice Emsellem, co-policy director for the New York-based National Employment Law Project, which advocates on behalf of mainly low-wage workers. Those actions could make a bleak employment situation even worse. The state's Employment Development Department is already overwhelmed with people trying to apply for unemployment assistance, and 68,800 pending appeals have swamped the state's much-denigrated appeals board. The federal government provides more than 90% of the funding for the two agencies, which have about 9,000 workers.Any money saved by forcing those people to take off unpaid days "cannot be used to offset budget shortfalls" or any other purpose, the Labor Department told California in the regional administrator's January letter. Whether appeals board judges take time off on Fridays or any other weekday "will have the same effect -- delay and increasing backlog," said a judge who asked to remain anonymous because he says the agency's acting executive director has prohibited the staff from talking to reporters. The same delays -- caused by workers staggering their unpaid days off throughout the month -- are expected to hit the Employment Development Department. A "good majority" of 300 One-Stop Career Centers, where the unemployed can use computers to prepare resumes and search job listings, will be shut Fridays because of the layoffs, spokeswoman Lorree Levy said. SOURCE:LAT.COM

What a Mourning! Caterpillar, Home Depot, Sprint Nextel, Pfizer, ING cut jobs

Call it 'Monday mourning.'

More than 70,000 job cuts were announced Monday morning by companies such as Home Depot, Caterpillar, ING, GM and Sprint Nextel, according to CNN.  Meanwhile, Pfizer announced another round of layoffs after buying the smaller drugmaker Wyeth for $68 billion. Here is a list of some of the companies that annouced job cuts:

• Construction machinery manufacturer Caterpillar will eliminate 5,000 jobs in an effort to "deal with a very challenging global business environment," according to CNN. This is in addition to the 15,000 job cuts already announced in 2008. The 20,000 total job cuts represents about 18% of the company's workforce, according to CNN.
  
• Home improvement retailer Home Depot will cut 7,000 jobs or 2% of its workforce, according to reports.  Most of the job cuts - about 5,000 - will come from the closing of 34 of Home Depot's EXPO Design Center stores, five YardBirds stores, two Design Center stores and an HD Bath store, according the CNN. 
  
  The remaining 2,000 employees will mostly be support staff positions.  Customer service positions will not be impacted, the company reported.
  
• Not only is financial services company ING eliminating about 7,000 jobs in 2009, its CEO, Michel Tilmant, stepped down Monday, according to CNN.  He will continue to serve as an ING advisor until August when he retires, according to CNN.
  
• Telecommunications giant  Sprint Nextel will eliminate 8,000 jobs by March 31 in an attempt to reduce labor costs by about $1.2 billion annually, the company said in a press release.
  
• Automaker General Motors will lay off 2,000 workers and cut production, according to MLive.com.  About 1,200 workers will be let go in Michigan and the remaining 800 in Ohio.
  
• Pfizer is making multi-billion dollar deals, while at the same time cutting jobs.  Pfizer, already the world's largest pharmaceutical company, agreed to buy drug maker Wyeth for $68 billon, according to CNN. 
  
  Pfizer announced that it would cut 10% of its staff and close five manufacturing plants, according to CNN. Pfizer announced earlier this month that it would lay off about 800 scientists.
  
  The company will borrow $22.5 billion to help fund the purchase. 
  
  ''The new company will be an industry leader in human, animal and consumer health,'' Pfizer CEO Jeffrey Kindler said in a press release. ''Its geographic presence in most of the world's developed and developing countries will be unrivaled.''

Obama Warns of Prospect for Trillion-Dollar Deficits

WASHINGTON — President-elect Barack Obama on Tuesday braced Americans for the unparalleled prospect of “trillion-dollar deficits for years to come,” a stark assessment of the budgetary outlook that he said would force his administration to impose tighter fiscal discipline on the government. Mr. Obama sought to distinguish between the need to run what is likely to be record-setting deficits for several years and the necessity to begin bringing them down markedly in subsequent years. Even as he prepares a stimulus plan that is expected to total nearly $800 billion in new spending and tax cuts over the next two years, he said he would make sure the money was wisely spent, and he pledged to work with Congress to enact spending controls and efficiency measures throughout the federal budget. “We’re not going to be able to expect the American people to support this critical effort unless we take extraordinary steps to ensure that the investments are made wisely and managed well,” Mr. Obama said, speaking about the dire fiscal outlook after meeting with his economic team for a second straight day. In his most explicit language on the subject since winning the election, Mr. Obama sought to reassure lawmakers and the financial markets that he was aware of the long-term dangers of running huge deficits and would take steps to limit and eventually reduce them. Big deficits force the government to borrow more money, saddling future generations with large financial burdens and leaving the nation reliant on foreign governments and other big investors to lend cash. The problem is even more acute now because credit markets, which in recent months have made it much harder and more expensive for businesses and individuals to borrow, could be further strained by financing a huge government deficit. On Wednesday, Mr. Obama plans to name a chief performance officer with the task of finding government efficiencies. He has chosen Nancy Killefer, who is director of McKinsey & Company, a management consulting firm, and was an assistant secretary of the Treasury in the Clinton administration. The Congressional Budget Office will also release its latest budget estimates, providing the first official predictions of the shortfalls tied to the economic slowdown and the fallen financial markets.Mr. Obama has made the economy virtually the sole public focus of his first full week in Washington since winning the election. He called on Tuesday for the creation of an economic recovery oversight board that would include outside advisers to monitor spending — and find abuses — of the economic stimulus plan. He also said earmarks for lawmakers’ special projects would be banned from the bill. CONTINUE READING...

Credit Card Companies Willing to Deal Over Debt

Hard times are usually good times for debt collectors, who make their money morning and night with the incessant ring of a phone. But in this recession, perhaps the deepest in decades, the unthinkable is happening: collectors, who usually do the squeezing, are getting squeezed a bit themselves. After helping to foster the explosive growth of consumer debt in recent years, credit card companies are realizing that some hard-pressed Americans will not be able to pay their bills as the economy deteriorates. So lenders and their collectors are rushing to round up what money they can before things get worse, even if that means forgiving part of some borrowers’ debts. Increasingly, they are stretching out payments and accepting dimes, if not pennies, on the dollar as payment in full. “You can’t squeeze blood out of a turnip,” said Don Siler, the chief marketing officer at MRS Associates, a big collection company that works with seven of the 10 largest credit card companies. “The big settlements just aren’t there anymore.” Lenders are not being charitable. They are simply trying to protect themselves. Banks and card companies are bracing for a wave of defaults on credit card debt in early 2009, and they are vying with each other to get paid first. Besides, the sooner people get their financial houses in order, the sooner they can start borrowing again. So even as many banks cut consumers’ credit lines, raise card fees and generally pull back on lending, some lenders are trying to give customers a little wiggle room. Bank of America, for instance, says it has waived late fees, lowered interest charges and, in some cases, reduced loan balances for more than 700,000 credit card holders in 2008. American Express and Chase Card Services say they are taking similar actions as more customers fall behind on their bills. Every major credit card lender is giving its collection agents more leeway to make adjustments for consumers in financial distress. Debt collectors, who are typically paid based on the amount of money they recover, report that the number of troubled borrowers getting payment extensions has at least doubled in the last six months. In other cases, borrowers who appear to be pushed to the brink are being offered deals that forgive 20 to 70 percent of credit card debt. CONTINUE READING..

Black Workers in Auto Plants Losing Ground

DETROIT — Since millions of African-Americans began leaving Southern farms for Northern factories nearly a century ago in what is still known as the Great Migration, the destinies of many of them have been entwined with the auto industry’s.Now, with Detroit reeling, many blacks find their economic well-being threatened.By last month, nearly 20,000 African-American auto workers had lost jobs, a 13.9 percent decline in employment, since the recession began last December, according to government jobs data analyzed by the Economic Policy Institute, a liberal Washington research firm. That compares with a 4.4 percent decline for all workers in manufacturing.“African-Americans earn much higher wages in the auto industry than in other parts of the economy, and the loss of these solid, middle-class jobs would be devastating,” said a report this month by the Economic Policy Institute.“The motor vehicle and parts industry, a sector of the economy that has been particularly welcoming to African-Americans, is becoming a shrinking island of prosperity,” the report said.Claudia Perkins, 55, who has worked in the automobile industry for 33 years and is now at G.M.’s assembly plant at Lake Orion, Mich., put it more bluntly. “If it wasn’t for the factory, the average black would not have been able to survive all these years, especially without an education,” she said.African-Americans occupy most rungs of the car production ladder, from plant workers to white-collar employees to auto suppliers and car dealers. Nelson White III, an industrial materials analyst at Ford Motor’s transmission plant in Livonia, Mich., said he was concerned that other African-Americans would not receive the opportunities he has.Mr. White started as an hourly worker in a Ford factory, attended college under a Ford program and made the leap to management in 1999. In May, he will graduate with a master’s degree in organizational leadership.“There’s a saying that when America catches a cold, African-Americans catch the flu,” said Mr. White. CONTINUE READING...

Bogus money goes mainstream

Amid a sour economy, one business appears to be thriving as the year comes to a close: counterfeiting. Arrests for making fake money have hit a five-year high.  Reports of counterfeit bills almost always go up around the holiday season. Yet as the economy sags, regular folks are trying to pass off fake bills to pay everyday expenses, joining what is typically the province of drug dealers, federal authorities say. Counterfeiting arrests in the USA jumped 28% this year over 2007 — the highest number since 2004, according to the Secret Service, a division of the Homeland Security Department that safeguards the nation's currency. Counterfeiters passed $64.4 million in fake cash into the economy, a 5% increase over 2007 and also a five-year high, says Special Agent Darrin Blackford, spokesman for the agency.  "It's not just the criminal element, but we're also seeing more students that maybe use a counterfeit $20 bill to buy pizza or someone trying to do it to purchase gas to get to work," says Brian Marr, Secret Service special agent in charge of the Little Rock field office. Marr says reports of fake bills spiked this year when gas prices hit record highs. The holiday surge comes as counterfeiters try to mix their bills into the crush of holiday shopping, federal agents and local police say. Counterfeiters also take advantage of technological advances in scanners and printers, which make it easier to duplicate currency. SOURCE:USATODAY.COM

More Companies Are Cutting Labor Costs Without Layoffs

Even as layoffs are reaching historic levels, some employers have found an alternative to slashing their work force. They’re nipping and tucking it instead. A growing number of employers, hoping to avoid or limit layoffs, are introducing four-day workweeks, unpaid vacations and voluntary or enforced furloughs, along with wage freezes, pension cuts and flexible work schedules. These employers are still cutting labor costs, but hanging onto the labor. And in some cases, workers are even buying in. Witness the unusual suggestion made in early December by the chairman of the faculty senate at Brandeis University, who proposed that the school’s 300 professors and instructors give up 1 percent of their pay. “What we are doing is a symbolic gesture that has real consequences — it can save a few jobs,” said William Flesch, the senate chairman and an English professor. He says more than 30 percent have volunteered for the pay cut, which could save at least $100,000 and prevent layoffs for at least several employees. “It’s not painless, but it is relatively painless and it could help some people,” he said. Some of these cooperative cost-cutting tactics are not entirely unique to this downturn. But the reasons behind the steps — and the rationale for the sharp growth in their popularity in just the last month — reflect the peculiarities of this recession, its sudden deepening and the changing dynamics of the global economy. Companies taking nips and tucks to their work force say this economy plunged so quickly in October that they do not want to prune too much should it just as suddenly roar back. They also say they have been so careful about hiring and spending in recent years — particularly in the last 12 months when nearly everyone sensed the country was in a recession — that highly productive workers, not slackers, remain on the payroll. At some companies, employees are supporting the indirect wage cuts — at least for now. The downturn hit so hard, with its toll felt so widely through hits on pensions and 401(k) retirement plans and with the future so murky, that employers and even some employees say it is better to accept minor cuts than risk more draconian steps. The rolls of companies nipping at labor costs with measures less drastic than wholesale layoffs include Dell (extended unpaid holiday), Cisco (four-day year-end shutdown), Motorola (salary cuts), Nevada casinos (four-day workweek), Honda (voluntary unpaid vacation time) and The Seattle Times (plans to save $1 million with a week of unpaid furlough for 500 workers). There are also many midsize and small companies trying such tactics. To be sure, these efforts are far less widespread than layoffs, and outright pay cuts still appear to be rare. Over all, the average hourly pay of rank-and-file workers — who make up about four-fifths of the work force — rose 3.7 percent from November 2007 to last month, according to the latest Labor Department data.Watson Wyatt, a consulting firm that tracks compensation trends, published survey data last week that found that 23 percent of companies planned layoffs in the next year, down from 26 percent that said they planned to do so in October. Companies say they are considering other cost cuts, like mandatory holiday shutdowns, salary freezes or cuts, four-day workweeks and reductions of contributions to retirement and health care plans.CONTINUE READING...