Credit score

http://www.latimes.com/business/la-fi-credit30-2008may30,0,1312903.story
Consumers will soon know the (credit) score
In the biggest class-action suit settlement ever, TransUnion promises access to data kept under wraps.
By Kathy M. Kristof, Los Angeles Times Staff Writer
May 30, 2008
More than 160 million Americans would be able to learn their all-important credit scores at no charge -- and with no strings attached -- under a settlement by credit reporting giant TransUnion Corp. of a long-running class-action lawsuit.

The agreement would entitle consumers to at least six months of a TransUnion monitoring service, giving them access to the latest information in their credit reports as well as their current scores at any time.

The service also would notify consumers by e-mail of significant changes to their files, including reports of late payments or accounts opened in their names. The latter information could help thwart attempted identity theft.

TransUnion normally sells the service for $59.75 or more, giving the settlement a value that could top $10 billion.

Extracting free services from an industry that many Americans love to hate could give them a measure of satisfaction. On a more practical level, the information could be especially useful for people who are borrowing more because of difficulties caused by the slowing economy or who simply want to find loans or cards with better terms.

Ken McEldowney, executive director of Consumer Action, a national advocacy group based in San Francisco, called the settlement mind-boggling.

"It's everything we tell consumers that they need to find out if they have problems with their credit," he said. "They are getting information on how to improve it and information about whether they are creditworthy. This is astonishing."

A credit report supplied by TransUnion or its rivals, Equifax Inc. and Experian, contains information about your current and recent home and auto loans, credit cards and other credit accounts, including how much is borrowed, your credit limits and whether payments are made on time.

A credit score, which is calculated using a formula based on that data, is a three-digit number that can determine what interest rate you pay on a loan or credit card, or whether you even are approved for one.

Federal law entitles everyone to a free copy of his or her credit report once a year from each of the three major credit-reporting companies, but it doesn't provide access to credit scores.

The case being settled stems from a business operated by TransUnion that sliced and diced data from the Chicago-based company's massive credit files to generate customized lists of consumers. Retailers, lenders and other businesses would buy the lists to use in their marketing.

Federal law bars the sale of a person's private credit information except under certain circumstances, such as when he or she has applied for a loan.

Although companies can gather and sell public consumer information, such as mortgage lien information that's filed with counties, plaintiffs in dozens of suits argued that TransUnion had overstepped those bounds, violating privacy protections.

The plaintiffs alleged that anyone who had a credit file maintained by it had suffered damages, mainly by being inundated with junk mail from marketers who bought data about them.

The suits were combined into one class action in federal court in Chicago. TransUnion and the plaintiffs in that case agreed to a preliminary settlement Wednesday. It requires final court approval, which is expected in September.

Based on the number of people in the class, the settlement would be the largest in U.S. history, said Peter A. Chapman, editor of the Class Action Reporter.

"This was a long, hard fight and an excellent result," said John Zarian, a Boise, Idaho, attorney whose clients -- some of the original plaintiffs in the case -- filed suit 10 years ago.

TransUnion, which discontinued the list-marketing business in 2001, has said it didn't violate the law.

"TransUnion is committed to providing consumers with tools and services that empower them to manage their own credit health," said Colleen Ryan, a spokeswoman for TransUnion. "The services offered through this settlement complement our many consumer-empowering initiatives."

Under the settlement, anyone who had any type of loan account between January 1987 and Wednesday would be able to select one of two options:

* A basic service would provide free credit monitoring for six months. It normally retails for $59.75, according to the settlement. Those who select this service can also apply for a cash payment.

* An enhanced service would provide nine months of free monitoring, plus use of a "mortgage simulator" that lets consumers see whether improving their credit score would affect their mortgage rates and how much they could save if it did.

This option also includes access to one's insurance score, which is used by some insurers to set rates (though California bars their use). The settlement values this option at $115.50.

Under the settlement, a credit card number would not be required to sign up for either service. After the free service ends, TransUnion could not charge for an extension unless it was requested by the consumer.

The agreement also creates a $75-million fund that would be used to notify class members about their rights, to pay attorneys and pay any damages agreed to for people who opt out of the class and sue TransUnion on their own. If there is money left in the fund after two years, it would be paid to people who applied for the cash. Consumers who received the enhanced service don't have the right to apply for the money.

Claims can be filed starting June 16 by going to the settlement website at www.listclassaction.com or calling (866) 416-3470.

kathy.kristof@latimes.com

Employer provided cell phone

http://www.nacubo.org/x10109.xml
Congress has introduced bills (H.R. 5450 and S. 2668) to loosen the rules that tax personal use of employer provided cell phones and require detailed records to be kept on business usage. See link above.

2009 Health Savings Account Limits

http://www.webcpa.com/article.cfm?ARTICLEID=27777
The Internal Revenue Service has published the 2009 inflation-adjusted deduction limits for health savings accounts.

For calendar year 2009, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan is $3,000. For 2009, the annual limitation on deductions for an individual with family coverage under a high-deductible health plan is $5,950.

For 2009, a high-deductible health plan is defined as a health plan with an annual deductible that is not less than $1,150 for self-only coverage, or $2,300 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $5,800 for self-only coverage or $11,600 for family coverage.

IRS allows stimulus rebate withdrawn from IRA's

http://www.webcpa.com/article.cfm?ARTICLEID=27608
Washington, D.C. (May 1, 2008)
By WebCPA staff

The Internal Revenue Service said that economic stimulus payments directly deposited to individual retirement accounts and other tax-favored accounts may be withdrawn tax-free and penalty-free.

The relief is designed to help taxpayers who may have been unaware that by choosing direct deposit for their entire regular tax refund, they were also choosing to have their stimulus payment directly deposited as well. The tax relief is available for amounts withdrawn from tax-favored accounts that are less than or equal to a taxpayer's directly deposited stimulus payment.

To qualify for relief, the funds must be withdrawn by April 15, 2009, in most cases. Without this relief, taxes, penalties and other special rules would apply to amounts removed from these accounts. Regular refunds are not eligible for this relief.

Eligible tax-favored accounts include traditional and Roth IRAs, health savings accounts, Archer medical savings accounts, Coverdell education savings accounts and qualified tuition programs. Thus, a taxpayer whose $1,200 stimulus payment is directly deposited into his or her IRA can take out up to $1,200 from the IRA, tax-free and penalty-free.

In general, the deadline for these withdrawals is the due date or extended due date for filing a 2008 return. This means April 15, 2009, for most taxpayers, or Oct. 15, 2009, for those who obtain tax-filing extensions.

Details on reporting these withdrawals and claiming relief will be included in tax forms and instructions for 2008. Other details are in Announcement 2008-44 on IRS.gov.

Social Security tutorial

http://www.socialsecurity.gov/employer/bsotut.htm
Social Security’s new online tutorial provides an introduction to Business Services Online. BSO offers step-by-step instructions for 10 business services available online, including:
▸ Filing Forms W-2 and W-2c online
▸ Access to Social Security Numbers Verification Service for wage reporting purposes
▸ Information for reviewing and correcting submissions and reports

Crazy new IRS disclosure regulations

http://accountant.intuit.com/practice_resources/articles/tax/article.aspx?file=tmdd_TaxRegClientComms
Here is an example:
When George Green prepares a client's return, he routinely checks to see if the client is eligible to make a contribution to an individual retirement account (IRA). If the client is eligible, Green asks if the client wants to make an IRA contribution. He does not ask about IRAs if a client not eligible to make a contribution. Green is "using" tax return information when he asks whether a client is interested in making an IRA contribution because Green bases the inquiry on knowledge gained from information that the client furnished in connection with preparation of the client's return.

For further information, click on the following links:
http://www.irs.gov/irb/2008-05_IRB/ar10.html
http://www.aicpa.org/pubs/taxadv/online/apr2008/tpp.html

U.S. Tax System Overview

Here is a report issued by the Congressional Joint Committee on Taxation on the Tax System in the United States:
http://www.house.gov/jct/x-32-08.pdf

IRS Statistics

http://www.mercurynews.com/personalfinance/ci_8929273?nclick_check=1
Here is a summary from the San Jose Mercury News on April 15, 2008:
Total number of tax returns expected to be filed by midnight tonight: 126 million

Paper returns expected: 44.9 million

E-files expected: 81.2 million

Extensions expected: 10.3 million

Extensions expected to be e-filed: 2 million

Total number of tax returns expected to be filed in the final week: 23.4 million

Paper returns expected: 14.8 million

E-files expected: 8.6 million

Californians expected to file extensions: 1.6 million

Californians expected to e-file extensions: 411,000

Average tax refund as of April 4: $2,436, up slightly from last year's $2,366

Source: Internal Revenue Service

For further information, visit http://www.irs.gov/taxstats/article/0,,id=102886,00.html.

Paying taxes electronically

I like electronic fund transfers and paying taxes is no exception. In my opinion, it is so much easier and safer than mailing checks. Paying taxes electronically will never have your checks fallen into the wrong hands, or keypunching errors at the IRS. And even if you mail the payment certified with return receipt, all you can proof is that you mailed something to the IRS.

If you e-file your tax return, you can set up direct withdrawal at the same time. And even if you paper file your tax return or if you have already e-filed your tax returns without selecting electronic payment options, you can still do so by going to www.eftps.gov for the IRS and http://www.ftb.ca.gov/online/webpay/index.asp for the state of California.

With direct withdrawals, you can arrange to have the taxes paid on the due date and not a day earlier. Your bank statement will clearly show the amount was paid to the IRS or Franchise Tax Board for tracking purposes.

Qualified Husband and Wife Joint Venture

Here is a link to the IRS guideline:
http://www.irs.gov/businesses/small/article/0,,id=177376,00.html