The IRS Enables the Return of Refund Anticipation Loans

New Orleans   Refund anticipation loans or RALs, as they were known, were one of the most predatory products on the market in their heyday targeted solely to low-and-moderate income workers who were most desperate for their tax returns. They were on the other side of the digital divide so less likely to file with the IRS electronically. The money was theirs, and tax preparers, especially the big boys of the market, H&R Block, Jackson & Hewitt, and Liberty Tax Services all exploited this desperation.

This was a 21st century national campaign for ACORN, and we forced the first negotiations with H&R Block after 330 actions in a 6 week time period during the height of the tax season, and eventually ended up with agreements with all three of the companies to wind down RALs. Disclosures of the interest rates were part all of the agreements, but it didn’t really matter since even if it said the interest rate on the loan to get their money one week earlier than the IRS would deliver it would cost them 349%, displayed in a poster or on the computer screen, if you have to have the money to pay rent or buy groceries or fix the car and you have to have it right now, disclosures, no matter how predatory don’t matter. Eventually we got HSBC to withdraw as the primary lender to the companies for RALs for what they termed, “reputational reasons” because the loans were so exploitative. Finally, the IRS and eventually other government agencies jumped in and also condemned RALs, and they finally faded from the market.

Now, thanks to the IRS, they are back, and there is even less doubt about the potential victims now. In 2017, the IRS decided to deliberately delay refunds until February for any taxpayer that claimed the earned-income tax credit or the child tax credit. These credits are only available to lower income workers. Presidents from Clinton to Bush to Obama have argued that EITC is the best and largest “anti-poverty program in the United States.”

On their website the IRS claimed they were concerned about an “error rate” of between 20 and 27% for filers in order to justify these delays. Something is fishy here. This is the IRS. The error rate should be an exact number based on information they have at hand on how many corrected filings they required, so giving a fudged number raises questions in my mind. Furthermore, their advice is to preparers who enable incorrect filings, which the IRS concedes are largely based on the complexity and confusion involved in the EITC program. Why was the pain not pushed to the preparers, rather than the families filing who were delayed unreasonably in receiving their returns? Oh, and meanwhile the number of audits of higher income filers is in the dumps now!

The preparers saw an opportunity and seized it by offering RALs again. Admittedly, these were no-interest loans this time offered against the amount of the return, and they had loan limits depending on the company’s policies. The big boys report over 1.5 million RALs are reported already this tax season with a month to go. Block did 840,000, Liberty175,000, and Jackson Hewitt 485,000. For the preparers, this is just the cost of customer acquisition, since it is cheese in the trap to catch low-income workers who would be forced to fork over the preparation cost to get their refunds.

No matter how much sugar you put in the coffee, this is once again the IRS partnering with private preparers to expand their businesses. The only real question is how long it will be before RALs are back in full and terrible force again?

The only good news in this tawdry story is that overall filings are down so far this year, so some people at least have decided to wait all of the vultures out.

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IRS, Among Others, Catching Too Many on Other Side of Internet Divide

0623_tax-800x480New Orleans    The IRS has problems. I get that. Well hated as a necessary evil, the Republican Congress has cut their budget to the nub in recent years to make it harder to collect taxes. In the 2015 tax season millions rightly complained that they had a better chance of talking to Santa Claus long distance from the North Pole than getting the IRS on the phone to handle a question. But, we have problems with the IRS, too, and part of the problem is with their plan to go even higher tech with a system of online taxpayer accounts and even worse to outsource more of the work to third party tax preparers, who have done little to earn anyone’s trust of the years.

The Taxpayer Advocate, Nina Olson, an independent office within the IRS, points out the obvious about the IRS’s new grand plan reminding them that millions don’t have internet access so what the heck? And, these are some of the folks that might need the most help. The Advocate in her annual report zinged her IRS employer as trying to create a “pay-to-play” system and essentially accused them of trying to run away from Jane and Joe Citizen Taxpayer. She also noted that lower income families were already been targeted too often by unscrupulous tax preparers asking, “Why would we want to give these preparers even more access to taxpayer information.” From ACORN’s experience in negotiating with H&R Block, Jackson-Hewitt, and Liberty Tax Services – the big three – who the IRS probably see as the good guys – were the same outfits that invented and fought tenaciously to hold onto completely predatory products like refund anticipation loans by spitting on the IRS for being a couple of days slower therefore worth paying what might amount to 350% or more in interest to get your refund a wee bit earlier.

Let’s be honest. In solving consumer problems, the internet does not make it easier by one iota to solve a problem for anyone with any outfit, it just makes it cheaper for the companies by reducing the staffing account of real problem solvers. This is a job reduction program, not a problem solving solution.

A couple of days ago I spent 75 minutes on the AT&T website and chat room trying to get a bill which is to say, trying to give them money! And, that didn’t fix it. They claimed they had been trying to send me a bill by email, but never managed to get it to me. Two days later when I summoned my resolve to try again I was finally able to get the amount owed and the address to send it, but was only able to get it fixed when then finally gave me an 800 number and a woman named LaShonda to get me straight. Their money is now in the mail, and, no indeed, after all of that would I have ever trusted them enough to electronically send the money.

PayPal has to be one of the most sophisticated and seamless of the new internet tech companies in the Silicon Valley. They are giving away a device so that you will use PayPal at the point of sale. KABF, the great noncommercial 100,000 watt station said, good idea. We are now caught in the second day of a dispute resolution process because they want us to verify the address and social security number of the station, but only wanted a utility bill. No phone number to call. No person who can work it out. We have now sent them 8 different pieces of information via the internet, and the only thing they have accepted on the upload and checked, “resolved,” was a personal passport, which a noncommercial corporation doesn’t even have. Geez!

And, those are two of a gazillion examples just this week, and I’m at least as smart as the average bear and a couple of steps away from being a techno-peasant. We’ve already had the huge internet enrollment fiascoes on the Affordable Care Act, and now we’re going to move the whole online system over to the IRS. We haven’t crossed the internet divide yet, but I can assure you this plan will engulf us in total and abject horror on the other side of gulf, if we’re ever able to get there at all!

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The IRS is Flopping on Election 2016

130514_irs_building_ap_605New Orleans      Sometimes you just have to pinch yourself when you’re reading the daily papers because what you’re reading is so unbelievable. Today’s interplanetary, Ripley’s Believe-it-or-Not set of stories features the USA’s Internal Revenue Service, the IRS, or the Service, as they call themselves, and the fact that they pretty clearly are flopping on the coming 2016 presidential election and deciding to let the pols pretty much do whatever they want, whatever way they want, and look the other way. Are you kidding me?!?

Ok, we all know that money has flooded politics and pushed the biscuit cookers, little people, and regular Joe’s to the margin. The currently trending Supreme Court did that, too, remember with Citizens’ United opening the floodgates to the Kochs and every other two-bit billionaire who wanted to buy, rent, or own a politician or party. Comedians famously organized their own super-PACs last election in protest of the money floating those supertankers of political influence.

What I do not think we had fully realized is that the IRS was going to just rollover and look the other way on all of this mess. Who do they think they are? The Federal Election Commission or something?

Not merely satisfied with super-PACS, although almost all of the candidates are still taking the PAC-crack, many are aligning themselves with tax exempt bodies formed as 501c4 formations, ostensibly classified as exempt from taxes because they are devoted to “social welfare.” In this case the welfare seems to be favored presidential candidates. They do not have to divulge their donors and many are clear that they have no intentions to do so by damn. Furthermore, though they are technically not supposed to coordinate with candidates and their campaigns, many share staff, board members, and, reportedly, extensive coordination and division of responsibilities with the candidates in that wonderful period when they stalked the country and the corporate suites without formally declaring the obvious fact that they were running for president. One such outfit, the Conservative Solutions Project, tied to Senator Marco Rubio has raised almost $16 million according to reports, more than many other candidates. Not surprisingly they have taken over some of the polling, analysis, research, and advertising that would normally have been done by the candidates own campaign. Come on now!

The IRS seems too buffaloed to bother, the people can go to the devil. They are not going to issue regulations on what is allowable political activity and expenditure until after the 2016 election when the cows are way past the barn, and maybe they will have already elected a cowboy president who will think all of this is dandy. Unbelievable!

Meanwhile on the home front we’re supposed to jump up and salute every April 15th and stand at attention with chills running down our spine every time we get a letter from the IRS. Don’t tell me that’s never happened to you!

Clearly there’s a solution. We need to reincorporate ourselves as 501c4’s and tell the IRS next time they ask that we’re going to do whatever we darned please just like all of the candidates for President. So there!

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Please enjoy Rickie Lee Jones’ Jimmy Choos. Thanks to KABF.

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Uneven Results in North Carolina Indicate that New Nonprofit Hospital Rule Might Work

316261297889322-xlNew Orleans   A combination of factors has curbed some, but not all, of the appetite for nonprofit hospitals’ frenzy of legal actions against lower income families in North Carolina, giving hope that the new Affordable Care Act restrictions against draconian collection practices might actually be effective.

We have been following closely whether or not nonprofit hospitals are modifying their behavior around the country in the wake of the final IRS and Department of Treasury rules that will require them to be much more effective in allowing lower income families to access charity care at the peril of their own tax exemptions.  Much of what we have seen while examining IRS form 990s, which the hospitals are required to file annually with the IRS, has not been encouraging given that all of these institutions have known this was coming since 2010 when Obamacare became law.  The leisurely four years until the rules became finalized at the end of 2014 should have allowed mountains to be moved in normal behavior and now that we are entering the penalty phase, the battle lines are being formed.

North Carolina may become one of the more interesting ones.  The passage of the Act and its amendments involving charity care prompted an investigation in 2012 by the states big newspapers, including the Charlotte Observer, in the biggest city uncovered 40,000 lawsuits that the state’s nonprofit hospital has filed to collect debts.  The headlines led to a happy confluence of forces with the legislature passing a law restricting emergency collection practices much like the language in the federal statute.   An updated review of the court records by the newspapers indicates that some hospitals have attempted to comply, others are scofflaws, and some cleaned up their act completely.  On the whole that’s good news and a potential harbinger of good things to come for the rest of the country as well.

A recent story by Ames Anderson and David Raynor in the Charlotte Observer,

…found that lawsuits by the state’s hospitals dropped by more than 45 percent from 2010 through 2014 – from about 6,000 to 3,200. At Carolinas HealthCare System, the state’s largest hospital system, the drop has been even sharper. The Charlotte-based hospital system filed about 1,400 lawsuits against patients last year – roughly half the number it filed in 2010.  One hospital, Iredell Memorial in Statesville, has stopped filing lawsuits against patients. In 2013, it was one of the state’s most litigious hospitals, filing about 270 bill-collection lawsuits. Last year, it filed none.   Lawsuits have also slowed to a trickle at two other hospitals: High Point Regional Hospital, which has recently joined UNC Health Care, and Lexington Medical Center, owned by Wake Forest Baptist Health.

More than 3000 cases is still a lot, and 1400 in one year from the Carolinas HealthCare System is outrageous, but progress is progress, and now with a powerful stick coming into the hand of advocates and organizations in North Carolina that could threaten and remove the hospitals’ tax exempt status, we might see more hospitals devoting themselves to their nonprofit mission like Iredell Memorial.

This is clearly a fight, but seems increasingly like one that we can win.

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Please enjoy Hurricane by Blues Traveler, Thanks to KABF.

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Tax Preparers Refund Anticipation Loans are Out of Control – Again!

AP_Tax_Refund_Advances_t_w600_h3000New Orleans         After years of campaigns by ACORN and agreements with the major tax preparers, H&R Block, Jackson-Hewitt, and Liberty Tax Services, to rein in the abuses and predatory pricing of “refund anticipation loans” or RALs, as they are known in the industry, it appears that the rats will play “while the cat is away.”  Nina Olson, the IRS’ national taxpayer advocate was quoted in an AP story calling the situation now the “wild, Wild West” and “called the level of risk for abuse in pricing and quality of service unprecedented.”  What the heck?!?

It seemed just yesterday that the tide was going the other way and that the earlier ACORN victories were being to be set in concrete.  The IRS had announced that they were promulgating rules to restrict the use of RALs – finally.  The IRS was finally going to create some rules of the road, including licensing at some level or something to assure a degree of competency by tax preparers.  Major banks like HSBC and others had refused to continue to offer the lines of credit to the preparers for such products for “reputational” reasons.  The Consumer Financial Protection Bureau had announced that it was on the case as well and strict rules were coming.   And, now it’s the wild West?

Refund anticipation have soared 17% to 21.6 million taxpayers in 2014 compared to 2011 according to IRS data given to the Associated Press.  Worse the big prep companies are hooked on this drug.  RALs and prepaid cards loaded with anticipation refunds make up 10% of H&R Block’s gross sales now, and the even more bottom feeding, Liberty Tax Services, is sucking up 20% of its revenues through such pure and simple exploitation.

Drive through any low-and-moderate income area and the tax payers are housed cheek to jowl along the main thoroughfares.  When you see the young people dressed in atrociously green Statute of Liberty costumes dancing with arrow signs to lure you into fast service at a Liberty storefront, don’t laugh, because the bait is luring victims into the trap.  Make no mistake about where the predators are feeding.  The IRS data reveals that “about half the purchasers are EITC recipients.”  The Earned Income Tax Credit touted by Presidents of both parties as their major anti-poverty program for low income, working families is only available for such families as a way to get ahead and survive, but those are the pockets being picked.  Of all victims of these high interest loans charging usurious rates between 250 and 400%, 84% are low-income.  There’s no question about what’s going on here.

The IRS is whining because they lost a court appeal on their licensing effort for tax preparers, but what happened to their efforts to rein in the RALS.  They have tools a plenty.  The Consumer Financial Protection Bureau now claims they are close to having something written up, but their scope seems limited to more transparency, and looks good, but has little practical impact on the predation.  ACORN got all of the companies to make posters with the rates that preparers would show at their desks and on their computer screens, but that was just the toll people had to pay to get on the faster highway to get their money.

The IRS and other agencies of government are essentially allowing an income transfer from the federal government intended for lower income families to become a direct remittance to private companies’ bank accounts, because they are unwilling to either put their foot down on the practice or step up and move all or part of the refunds to families more quickly themselves or through preferential preparation sites.

This ought to be a scandal, and, if intent counted, it’s a crime.  Without a doubt it’s a government approved swindle.

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Street Dogs – Unions and the Law (Alt Version)

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Nonprofit Hospitals Are Going to Have to Prove They are Not Wolves in Sheep’s Clothing

medical-bills1-660x330Little Rock     For many top executives and CEO’s it easy to imagine that running a big urban nonprofit hospital has been a sweet gig.  Looking at some of the 990’s that all nonprofits submit to the IRS annually, salaries in the millions are not unusual at some of these big hospitals and many make millions all down the corporate flow chart. They are big whoops in their local communities with thousands of jobs and money to spend and, hey, for all that the regular folks out there know — they’re doing fine, while doing good. Luckily for their patients and the whole community, their world is going to have to change.

Modern Healthcare, the industry’s bellwether magazine, reported recently on the shivers running through many nonprofit hospital CEO’s spines as they absorbed the new world in which the courts and the Federal Trade Commission are no longer willing to take their word for it when they say that mergers and consolidations in their markets will just mean better patient care, when it is clear that they will also create healthcare monopolies able to charge escalating prices on a captive market. A federal appeals court has ordered St. Luke’s Hospital in Bosie, Idaho to unwind their purchase of a major area medical practice, the Nampa, Idaho-based Saltzer Medical Group.  The court essentially said that they could hear St. Luke’s saying it would be better for the community and patient care, but in fact St. Luke’s would have to prove that it wasn’t really much more than an attempt to build a health care monopoly with no price controls.  The FTC had earlier delivered a similar blow to an Ohio hospital, and the head of the FTC has been speaking loudly and clearly in recent months about the agency’s skepticism towards healthcare mergers now.And, then of course you have the fact that nonprofit hospitals are going to have to toe the line because of the new rules from Treasury and the IRS being implemented under the Affordable Care Act. As we assemble our “volunteer army” to look at the 990s for nonprofit hospitals in Texas, Arkansas, and Louisiana, we’re already seeing enough to turn our stomachs.  A billion dollar children’s hospital that claims to spend only $6 million in charity care and some of that is suspect, along with huge fundraising efforts that seem mainly about politics, public relations, and marketing and in fact lose money at year’s end. So-called “community benefit” items included under charity care by other nonprofits that are also in many cases simply marketing efforts dropped into the category.  Many are simply self-serving like one outfit that put the cost of training its doctors as a community benefit under charity care.  I get the feeling when Local 100 finishes pulling all of these pieces together it’s going to make our hair burn and our hearts’ hurt.St. Luke’s in Idaho is a bit far out of our range, but looking at their particular cut on the twisted reality of all of these matters gives me a feeling that they also are going to have many lessons to learn. In their Q&A section they are careful to point out that they are nonprofit and exempted from some taxes, and in their view that requires them to invest in expansion and new services. How about charity? No mention of that. In fact in their self-presentation they have a unique way of describing for their whole hospital system how they see charity. Here’s how they explain their munificence when it comes to handling Medicaid:

The amount of money St. Luke’s receives from Medicaid is an indication that St. Luke’s provides care to a large number of Medicaid patients. In fact, St. Luke’s provides more care to patients covered by Medicaid than any other health care provider in the state.  Medicaid pays hospitals well below the cost of providing care to Medicaid patients.  The costs that count for Medicaid purposes do not include all of the hospitals costs, so the reimbursement is even less on a percentage basis than it would appear.  Because Medicaid pays below cost, a higher volume of Medicaid funding results in lower net revenue for the hospital.  In other words, on balance, St. Luke’s pays to see Medicaid patients because we spend more on the care of the patient than we receive in payment for the care we provide.

What a unique argument!  St. Luke’s “pays” to see the poor, because they believe that Medicaid reimbursement rates are low compared to their view
of their market pricing.

In a similar bit of double-speak, St. Luke’s communicates in totally imperial and oblique terms their collection policy for the poor Idahoan
that cannot pay the sticker price.

If a patient has difficulty paying their medical expenses, St. Luke’s Patient Financial Services works with them to determine what options are available for assistance, including a possible payment plan.  If it is determined that a patient can pay all, or a portion, of their medical bills but chooses not to do so, St. Luke’s refers those accounts to a collection agency to help collect payment from patients. St. Luke’s may charge interest on outstanding accounts depending on the circumstances.

“Chooses” not to do so?”Interesting.  Probably the same way they “choose” to be poor or unemployed or even for that matter, sick and in the hospital in the first place.  It doesn’t take much imagination to believe that St. Luke’s is taking a page out of the now notorious Heartland Hospital’s playbook in St. Joseph, Missouri.We’re doing the work, but we can already tell even as we get started that we are not going to like what we find, but neither are some of these nonprofit hospitals, because change is coming. There are way too many wolves in sheep’s clothing seeing nonprofit status not as a mission but as a tax dodge.
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Please enjoy Modern Times by Dropkick Murphys

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