Stimulus Grants List

In today’s recession, collection companies are not exempt. Starting last year, they first started to suffer from declining liquidation performance, staffing cuts, and increased placements.

Then in January 2009, the U.S. savings rate grew and continued to grow. By May 2009 the rate was the highest level of consumer savings in sixteen years.

Usually, an increase in the U.S. savings rate would mean that consumers will be more fiscally responsible and try to pay off debts that they may owe in case of an unexpected adverse event. Unfortunately the first half of 2009 has shown us that this is not what is going to happen and the collections industry should not expect it to.

One factor that makes the situation worse is that the sustainability of savings growth is quite doubtful because a part of the increase was the result of the Obama stimulus package, which sent one time only disbursements to consumers. Also, in today’s economy any type of consumer savings may be considered a means to keep heads afloat as opposed to future planning. And although savings boost personal income, they slow down consumer spending.

For the first time, collections agencies need to shift their focus drastically. Its not that consumers won’t pay, it’s that they can’t pay. Therefore, the future success of collection companies is dependent on U.S. economic recovery.

That being said, informed conclusions can be drawn about the future growth in the collections industry. Better employment opportunities would be an invaluable gain for the collection industry. If debtors have jobs, they are more likely to resolve their issues. Renewed consumer confidence and spending would be a tremendous boost.

There is an impending tide of pro-consumer reforms that the collection industry can do little about. How it can truly affect change would be the quality of responses they give, and that they are carefully considered and level-headed. Finally, increased access to credit is a necessity for the collections industry. .

Mallory Megan works for Rapid Recovery Solution and writes articles on national collection agencies.

Another thing that makes the IRS suspicious is hobby losses. Last year the Internal Revenue Service gave its agents a manual about how to find hobby losses, where tax payers underwrite activities they enjoy – like soccer – by labeling them as businesses and claiming a loss on a Schedule C under the guise of self employment. Remember that any Schedule C that lists a loss will be under scrutiny, especially if your new business has something to do with anything fun or enjoyable.

Although there is nothing wrong with doing your own tax return, if you hire the help of a tax preparer, make sure that they are on the up and up. The Internal Revenue Service has pretty much come out and said that it keeps a list of tax professionals that they find wary, but they will not tell you who these people are.

So always keep in mind that using a tax preparers who claims that they can get you bigger refunds than others, takes their fees out of a cut of the refund, or suggests that you do anything that may seem shady is not a safe idea, no matter how enticing their promises or suggestions may sound.

And although this may seem obvious to you, many people still do not get the fact that you can’t claim that you don’t owe taxes because the tax system is voluntary, or you have a Fifth Amendment right against filing self-incriminating tax returns. The IRS will just add penalties to the money you already owe because these are “frivolous arguments,” and the courts will support it.

One final thought: even if you are able to pull the wool over the eyes of the IRS, don’t go around bragging about how you did it. Something that a lot of people don’t know is that the IRS is now authorized to pay snitches a lot of money to rat you out!

Mallory Megan works for Rapid Recovery Solution and writes about medical collection agencies. Free reprint avaialable from: How To Avoid An Audit By The Internal Revenue Service Part Two.