New Pittsburgh Courier
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BUSINESS APRIL 13-19, 2016
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How taxpayers get sideways with IRS by Constant Watson III For New Pittsburgh Courier
A taxpayer’s problems with the Internal Revenue Service start in any number of ways, but it is seldom that a tax problem arises from a taxpayer setting out with the intention of defrauding the IRS. Most tax problem cases begin as the side effect of some serious life event. Some of the events that lead to tax problems are: Divorce Divorce can result in unexpected tax liabilities. A spouse may start to receive alimony payments without being aware of the fact that this new form of income is taxable. A divorce settlement may involve the liquidation of some material assets that result in taxable gains. A division of property is often facilitated by converting assets to cash, like an insurance policy, with the unexpected aspect of a tax liability. A taxpayer may be divorced near the end of the year and find that taxes withheld from wages through the year were based on filing a joint tax return with several exemptions. Because of the new filing status, as a single taxpayer, they find themselves grossly under withheld and facing a large, unexpected balance due. This all might happen at the same time the taxpayer is incurring significant expenses trying to get re-established in a new life. These situations can arise in the most amicable of divorces, but when a divorce becomes adversarial or even hostile, other issues may further complicate a taxpayer’s ability to file their tax return timely and properly. If enough animosity is present, one spouse may withhold tax documents the other spouse needs to file a return or worse yet, may destroy tax and business records. Loss of employment Loss of one’s job may cause unforeseen tax issues in multiple ways. A taxpayer collect unemployment benefits after suffering the loss of a job. Because of their reduced income, they might forego having taxes withheld believing they need every penny to live on. When the year ends, they prepare their tax return, only to learn there is a balance due. This starts a cycle of not filing that often runs for years before the IRS pursues them to the point they have no choice but to try to get back on track. In another job loss scenario, a taxpayer withdraws funds from retirement account such as 401K plans or IRS account. They are attempting to maintain their old lifestyle while seeking new employment. They think that because of the loss of earnings they will have reduced tax liability and that they need to held onto as much as possible of their income until the new job is found. Therefore, no taxes are withheld and the next tax return shows an insurmountable balance due. Forgiveness of debt Tax problems can also happen when a forgiveness of debt occurs. Taxpayers are often shocked to find out that they owe taxes because they have suffered an economic reversal. For example, under the cancellation of debt rules, a problem that ended up in the loss of an asset through abandonment, foreclosure, or repossession can cost them tax dollars. The IRS treats the amount of debt that is cancelled for forgiven in these situations as taxable income. Note that there are exceptions to this rule that apply in bankruptcy SEE TAXPAYERS C2
A FAMILY AFFAIR—Monster and Mom’s Hauling owner Debbie Rankin with grandson Dom Walker use their recycling business to help others. (Photos by Diane I. Daniels)
Recycling business used to recycle lives by Diane I. Daniels For New Pittsburgh Courier
Obstacles are a way of life, but if you ask Debbie Rankin, her son Charles Tarrant and grandson Dom Walker, the owners of Monster and Mom’s Hauling they will testify that obstacles are also a way of doing business. Within their two years of operation the trio has endured family sickness and death, a shortage of funding and most recently difficulty with former employees that were also family members conducting fraudulent activity. They illegally dumped tires on a site Monster and Mom’s was renting, causing the business to be cited by the Department of Environmental Protection. But through it all Rankin said the obstacles have made them stronger, taught them lessons and the DEP is allotting them time to clean up the area. Also as a result of what happened Monster and Mom’s now operate from a warehouse in Lower Burrell and Oakmont Rentals has assisted them in purchasing a 26-foot storage truck. Monster and Mom’s Hauling, described by Rankin is a business that hauls used tires for recycling purposes. “We pick up the tires and store them until they are picked up by a recycling company.” She said her company is identified by Commonwealth of Pennsylvania DEP staff as the only female- and Black-owned in Pennsylvania with a hauling permit. A typical client consists of businesses like Good Year, Fire Stone, gas stations, garages, auto dealerships or any business that has to dispose of scrap tires. Because tires are manufactured to be highly durable and weatherproof, which
READY TO ROLL—Dom Walker of Monsters and Mom’s Hauling loads some of the last of the illegally dumped tires into their trailer to be hauled away for recycling purposes. causes mass landfill space to be used up, tires are non-biodegradable and are considered a large and problematic sources of waste. When recycled tires are turned into among other things turf used for football fields, rubber modified asphalt and rubber for shoes. They are repurposed and used for flooring on playgrounds and swings. Tires can also be recycled into other tires and
have been cut up and used in garden beds as bark mulch to hold in the water and to prevent weeds from growing. Some “green” buildings, both private and public, have been made from old tires. Often tires are burned and used for fuel purposes. A retired paralegal professional after working 38 years in Downtown Pittsburgh law firms, Rankin said Monster and Mom’s came about as a way to supplement her income. “After deep thought, doing some research and talking to my oldest son who is a trucker, we came up with the idea to haul used tires for recycling purposes. I found that there are not a lot of these type of businesses in western Pennsylvania and it can be a lucrative business,” Rankin explained. “Even the people at DEP consider us unique.” Very family oriented Rankin said, “My idea immediately was for it to be a family business. I have nephews, cousins’ children and friends who are considered unemployable due to run-in’s with the law—be they minor or considered somewhat major. “My grandson Dom graduated from Indiana University of Pennsylvania with a bachelor’s of science degree in communications with a focus on media in 2014 and has yet to be able to find a job in Pittsburgh. He had his own television show in college, announced football, basketball and baseball games; however, is unemployable. Granted he pleaded guilty to a misdemeanor while in college and was placed on a small probationary period, he has run into problem after problem when applying for jobs. He couldn’t even obtain a car salesman position.” SEE RECYCLE C2
Baptist leader: Unregulated predatory lending will cause perpetual poverty
Every once in a while a congressional committee hearing can almost seem like a time to grab your popcorn and a seat to hear the exchanges and varying opinions. On April 5, a U.S. Senate Banking, Housing and Urban Affairs Committee hearing on consumer finance regulations became one such occasion. The session was convened to publicly “assess the effects of consumer finance regulations”. In plain English, it was a time to publicly debate whether the Consumer Financial Protection Bureau (CFPB) had been good or bad for the country, since opening operations in July 2011. The forum also hearkened back to many of the former supporters and opponents of proposals to reform Wall Street in the aftermath of the worst economic crisis since that of the 1930s. Alabama’s Sen. Richard Shelby, chair of Senate Banking has consistently opposed the idea of creating an independent bureau with a director instead of a commission and a budget that would not be subject to the annual budgetary appropriations process. “Because of the Bureau’s structure and the means by which it is financed, it remains one of the least accountable agencies in the federal government,” said Sen. Shelby in his opening remarks. Conversely, Ohio’s Sen. Sherrod Brown, the committee’s Ranking Member, has just as vociferously supported financial reforms to shield consumers from further harms. “The CFPB has been a success,” stated Sen. Brown. “The agency has taken strong actions in a number of consumer finance
sistance. “But other abuses continue to run rampant,” continued Rev. Gable. “Some may be more obscure than mortgage lending, but they are ever powerful, ever destructive...Payday lending is an abomination in plain sight. A debt trap by design.” In his allotted five minutes, Rev. Gable cited a litany of other lending ills: bank overdraft fees, discriminatory auto lending, law-breaking debt collectors, student debt and those who prey upon the elderly. “Please allow me to be clear: The notion that struggling Americans need access to products like those the Bureau has been working so hard to address is an insult to the basic dignity of every vulnerable person,” concluded Rev. Gable. “The predatory practices CFPB is addressing siphon off what little resources targeted persons have and leave them worse off…Uncontrolled predatory lending practices will relegate some communities to a state of perpetual poverty.” “Now, when more than a million families remain seriously behind on their mortgage payments and just under half a million more are in some stage of foreclosure, it is not a time to move backwards into the same failed and reckless lending practices,” continued Calhoun. “Instead, we must continue to move forward to a more sustained housing recovery that benefits consumers, lenders and investors alike.”
markets that previmillion. Lives ously had no federal Charlene Crowell turned upside oversight, including down. Life savings credit reporting, washed away. $2.2 debt collection, paytrillion in lost propday loans, student erty value, over half loan servicing, and from communities auto finance. The of color.” benefits of the CFPB In its comments are clear: its actions submitted to the have resulted in committee record, $11.2 billion being returned to over 25 mil- the Center for Responsible Lending agreed lion consumers.” with Rev. Gable’s assessment. “Abusive loan terms and lender practices The only hearing witness that spoke in support of all that CFPB has accomplished bear responsibility for the foreclosure was Reverend Dr. Willie Gable, Jr., pastor of tsunami that disproportionately stripped New Orleans’ Progressive Baptist Church wealth from communities of color,” noted and chair of the Housing and Economic De- Mike Calhoun, CRL President. ‘Risky borrowvelopment Commission of the National ers’ had neither the power nor the authority Baptist Convention, USA. He brought to to cause a housing market meltdown.” As this column has earlier reported, the the forum a bit of Baptist cadence and truth-telling to the Capitol Hill committee, families who lost their homes to foreclosure underscoring the damage that predatory since 2004 were not the only victims of the lending continues to inflict. His perspective crisis. Untold millions who lived nearby was also a significant one representing the foreclosed homes may have kept theirs, but National Baptist Convention USA with its became upside down on their mortgages, 7,500,000 Baptist congregants. It is the old- owing more than the devalued homes are est and largest religious convention in the now worth. The rippling effects of foreclosures nationwide led to multiple losses – nation. “Twelve million families lost their homes jobs, businesses, incomes, and even local (Charlene Crowell is a communications manager as a result of the financial crisis,” stated property taxes that support vital services with the Center for Responsible Lending. She can be Rev. Gable’s written testimony. “Twelve like police, fire and emergency medical as- reached at Charlene.crowell@responsiblelending.org.)
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