Ending the need for third-party tax preparers
As the tax season deadline for 2016 closes, I think it’s safe to agree that most of us think that tax preparation has gotten too complicated. There have been a lot of suggestions on simplifying tax collection, and the newest one is from United States Senator Elizabeth Warren (D-MA).
The Tax Filing Simplification Act of 2016 has been introduced as legislation to compel the IRS to develop a more efficient means of preparing and submitting taxes. Instead of going through third-party preparers or software, taxpayers would be able to tap into the information which has already been submitted to the IRS to report their own taxes. Under Warren’s plan, this system would be free, which would save taxpayers about $200/year.
Isn’t filing taxes already free?
In 1998, there was a mandate for a return-free filing system for individuals. Although many third-party companies offer free filing now, there are so many hurdles to get through, only 3 percent of taxpayers take advantage of it. Free-file is generally directed at individuals who do not need special forms.
Many times, someone begins the form, believing it will be free only to discover they are ineligible and will need to pay the third-party company to complete the filing. And this is just at the federal level. We’re not even talking about state taxes.
Does the legislation stand a chance?
Republicans seem to support the Fair Tax Act, which would essentially eliminate the IRS and create a nationwide sales tax. Warren faces an uphill battle in the legislature to pass this bill. The IRS had a massive data breach in 2015, which makes it unlikely that many taxpayers will want to give them this much power of their data. Although they already have the information that is submitted each year, as taxpayers get access to it, the risk of a larger breach increases. Even if the bill passes, it could take two or three years to actually implement the program. It’s possible that Warren’s Tax Filing Implication Act could be challenged in the courts by tax preparers who don’t want to lose their livelihood.
You can read the staff report that outlines the issues here. Warren’s legislation is supported by many prominent lawyers and economists. I do think it would help some taxpayers, but the whole system needs an overhaul. It’s hard to get 435 representatives to agree on anything, let alone another 100 senators. We’ll probably have a few more years of the bulky system that we currently have.
FFEE Act wants to save you from having to pay to freeze your credit
(POLITICS NEWS) The FFEE Act wants to help give consumers more rights more control over how credit agencies use their data.
Following the compromise of consumer data from credit reporting bureau Equifax, Senator Elizabeth Warren (D-MA) and Senator Brian Schatz (D-HI) have introduced the Freedom From Equifax Exploitation (FFEE) Act.
This act aims to give consumers more rights more control over how credit agencies use their data.
The bill is available here, but here is a few of the bill’s highlights:
- Create a uniform, federal process for obtaining and lifting a credit freeze.
- Preventing credit reporting agencies from profiting off the use of consumer information for the duration of a credit freeze;
- Strengthening the fraud alert protection from 90 days to a one year, with a year renewable.
- In ID theft cases, a 7 year fraud alert is created.
- Require any credit reporting agency who charged a fee to freeze credit in response to the data breach to refund those fees,
- Allow for an additional free credit report (consumers already get one under the Fair Credit Reporting Act through annualcreditreport.com)
The most important feature here is the removal of any fee to freeze your credit. Currently, agencies like Equifax charge nominal fees to freeze credit (anywhere from 3-10) dollars. If this bill passes – not only will that service be free, but it will restrict the way credit agencies use that information while the freeze is active.
The idea behind making this free also keeps credit companies, whom many believe are responsible for the security of credit information, from profiting off information breaches. Given that many financial advisors have advised those impacted to freeze their credit, this would be a benefit to consumers.
It is important to note here that Equifax has suspended the fees to freeze credit for the next month.
A credit freeze restricts access to your credit report. Simply put, it requires the credit agency to contact you first to ensure it was you who applied for credit, thus making it harder for you to apply for credit. You would need to unfreeze your account to apply for new credit. You must also freeze credit with each bureau, which can lead to some expenses as you must pay anytime to lift a freeze.
Remember: a credit freeze doesn’t impact current accounts or your credit score. If you apply for credit often, or open new accounts often, then a credit freeze may not be for you.
Lots of names
The bill has several original co-sponsors, including Senators Sanders, Franken, and Blumenthal. Companies like the National Consumer Law Center, Americans for Financial Reform, CREDO, and the Consumer Federation of America all have also endorsed the bill.
President Trump disbands his business councils with one tweet
(POLITICS) President Trump has disbanded the councils that he previously very adamantly supported, so what happened?
We interrupt this regularly scheduled program
Huge news on the domestic policy front – per a Twitter announcement, President Trump’s two business advisory councils – the Strategic and Policy Forum and the Manufacturing Jobs Initiative – have been disbanded.
The sequence of events has been fast and difficult to follow, but here’s how things went down.
See ya later
On Monday, Kenneth C. Frazier, the CEO of pharmaceutical giant Merck, resigned from the Manufacturing Jobs Initiative in protest at President Trump’s comments on the recent violence in Charlottesville. By the evening of the same day, Brian Krzanich of Intel and Kevin Planck of Under Armour had done the same. They were quickly followed by Thea Lee and Richard Trumka of the AFL-CIO, Scott Paul of the Alliance of American Manufacturing, Denise Morrison of Campbell Soup and Inge Thulin of 3M.
This morning, in response to the sudden exodus, Stephen Schwartzman, chief executive of the Blackstone Group and longtime Trump business and political ally, led a conference call of the remaining council members this morning to debate how to proceed.
By the end, all members had resigned.
In short, President Trump is not disbanding his advisory councils in the sense of (no “The Apprentice” jokes, please) firing their members. The members already quit. The President’s Tweet simply announced that had taken place, and that, as it states he “disbanded” the now-vacant groups, there are presumably no plans in the near future to replace them.
This is a surprising move from the President. Historically the role of business advisory councils has been to keep an open communication pipeline between the President and the American business community, something this president has consistently identified as a priority. President Trump has always positioned himself as passionately pro-business, particularly concerned with global competitiveness and the loss of jobs and revenue in American manufacturing.
The Strategic and Policy Forum and the Manufacturing Jobs Initiative were founded specifically to address those issues.
The business community in particular had expected the President to draw heavily on their advice.
On the other hand, that advice has repeatedly conflicted with the President’s other policies. Well before Charlottesville, the Strategic and Policy Forum had seen high-profile resignations: Bob Iger of Disney and Elon Musk of Tesla (who served on, and resigned from, both the SPF and the Manufacturing Jobs Initiative) resigned over the President’s withdrawal from the Paris Climate Accord, and ex-CEO of Uber Travis Kalanick departed over restrictions on immigration from the Middle East.
President Trump’s elimination of his business advisory councils clearly indicates a new direction in the relationship between the White House and the American business community.
What that direction will be, and what consequences it will have for the economy, remain to be seen.
The House just voted to take away some important consumer rights
(POLITICS) If adopted by the Senate and the President, our banks, credit card companies, student loan companies, and other financial services will have a hall pass on all sorts of bad behavior.
Same story, different day
Big banks have won again, as they and other financial institutions continue to restrict consumer rights all in the name of “choice.” Well, choice for the companies that is.
The GOP controlled House just voted to introduce a Congressional Review Act Resolution that if passed by the Senate, will make it harder for consumers to have their day in court.
Bump the consumers, right?
The Resolution would overturn rules from the Consumer Financial Protection Bureau (CFPB) aimed at protecting consumer rights and keep financial institutions – like banks, credit card companies, and loan services – in check.
The rules center on the forced arbitration clause that is hidden among many contracts.
This clause allows consumers and companies the chance to settle issues behind closed doors without going through the legal system. That doesn’t sound too harsh at first glance, right? Well, of course there are a few caveats that allow the pendulum to swing in favor of financial companies.
Like the fact that there are no public records of these arbitrations, even if the company was found at fault.
Also, that consumers can choose between arbitration and the court system unless the company wants arbitration, then the choice is gone. Most importantly, forced arbitration severely limits class action lawsuits, which results in a lot less individual suits.
Wall Street wins again
Many bank-backed House representatives argued that class action lawsuits only result in a miniscule payout for consumers.
This may be true, but it is a smaller amount for a lot more people.
This means the company pays a larger amount to more mistreated consumers overall. House Democrats, none of which voted in favor of the Resolution, feel that this is another way for Wall Street to benefit from their ties to lawmakers. Without a chance to go to court, consumers are deprived of their rights simply by signing a contract.
There’s still hope
Consumers still have a chance if the Resolution is rejected by Congress. It will be more of a debate, since it would only take two opposing votes from the GOP side to reject it. Hopefully they will consider who the CFPB rules protect.
No consumers have raised issues to repeal them. It is a wish from the financial companies they have affected, and unfortunately their wish just may come true.
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