IRS Tax Problems
Bank Failures have led to IRS Tax Problems.
Each April 15th when the tax man comes knocking (not literally) millions of Americans scramble to get their returns filed on time. The lines are long at the Post Offices but not as long as they used to be in the days before filing over the internet became available. Now all you need to do is click and your tax return is filed.
Due to the economic downturn of the past several years however, many hundreds of thousands of hard working Americans have found themselves facing mounting IRS tax problems due to their inability to pay their tax debts at the end of the year. These IRS tax problems are especially prevalent among self employed people and small business owners. These people, the backbone of the American economy, have been literally ground into the dirt by IRS agents and unfair tax laws.
Several years ago when the economy was cranking along, many 1099íd self-employed contractors would just wait until the following year to pay their taxes instead of paying quarterly as is recommended and in fact, required by law. They did not mind paying the whole tax burden from the previous year plus some minor penalties in exchange for having more of their income available to spend during the previous year.
This practice was especially prevalent among Real Estate agents and mortgage brokers and loan officers. Many of these service industry professionals were making great money back in the real estate boom days before the latter part of 2007 when the economy as a whole started to seriously tank and banks stopped lending.
The main problem and the reason many real estate professionals are now faced with large scale IRS tax problems is that no one could see the end was coming. The gravy train of the early 2000s came to a screeching halt after the summer of 2007, but was not apparent until much later that year and into the beginning of 2008.
The problem was that banks continued to take loan applications by borrowers and real estate agents and loan brokers continued to take applications from their clients as if nothing was wrong. The first signs of trouble began late in 2007 when many borrowers and home buyers began to be declined for their loan applications after many months of waiting and repeated requests from the banks to turn in more and more documentation.
Banks tightened credit and in fact stopped lending but did not tell anyone. If the banks had just told their clients that they were no longer lending many experts agree that it would have helped to forestall this horrible situation we are now facing. For example, if you as an agent knew for a fact that the bank was not going to give a loan to your clients (home buyers) then you would have been more careful and saved your earnings from earlier on and had enough the next year to pay your taxes owed.
The banks and lending institutions knew they were not going to give out loans but they decided it was in their best interest not to advertise that fact to the world. In fact many banks hid their toxic assets and played illegally with their balance sheets to make it look like there was nothing wrong and be able to make money on the stock market.
Citigroup was one of the worst when it came to these illegal practices and the government is currently making a half hearted attempt to prosecute them but with mixed results. The problem is that Citigroup is too big to fail and we all know what that means: they will be protected while the rest of us have to face our IRS tax problems without any help from the government. Where is the bailout for ordinary hard working folks? Nowhere to be found it seems.