Tax Debt Relief – Negotiating with the IRS

Tax debt relief is rare, but is sometimes awarded to individuals who’ve overextended themselves and are unable to pay their taxes by the time they are due.

Unfortunately, getting Uncle Sam to cut you a break is not easy. That’s because all the laws are written to favor the federal government.

Sure, the government provides bankruptcy laws. But going through bankruptcy does NOT discharge your tax obligations!

In other words, the government will forgive your debts to others, but will not forgive the tax debts you owe to them.

If you think this is a hypocritical double-standard, you’d be right. Nevertheless, it’s just the way it is, and we have to play by the rules our legislators make.

Tax Installment Plan

The most common kind of relief the government will offer you is some kind of installment plan. They may allow you to make four or five equal payments over four or five months. Or they may spread out your payments over 60 months.

Every situation is unique. Different terms are offered to different people.

If you have a huge tax obligation, an installment plan will at least break down the payments so they are somewhat more manageable (although certainly no less painful).

Offer in Compromise

Although it is extremely rare, the IRS may offer you what’s called an Offer in Compromise. This is basically the same thing as settling a debt.

If you owed $20,000, the IRS may evaluate your situation and decide you will never be able to repay that tax debt. And so they may allow you to make a single lump sum payment for less than what you owe.

By making this reduced lump sum payment, the IRS then agrees to wipe out the entire tax debt.

In a perfect world, an Offer in Compromise would be more common. But the federal government is quite greedy, so this kind of settlement is very rare.

How to Seek Tax Debt Relief

Anytime you face a tax obligation that you cannot pay, then your best course of action is to contact the IRS and talk to somebody. Do not try to hide from the IRS; be transparent with them.

Many times you will be able to negotiate some kind of installment plan. In fact, there are four different kinds of installment plans depending on how much you owe and your past history of filing your taxes.

You can find out what you qualify for by searching the IRS web site or calling an IRS agent directly.

If you are facing a genuine hardship involving a disabled child or insurmountable medical bills, the IRS may be willing to forgive a portion of your debt through an Offer in Compromise.

But in order to see if you qualify for such an offer, the IRS would need to thoroughly evaluate your financial situation.

Remember: Tax debt relief comes in many forms. Don’t procrastinate and try to hide from the IRS. Call them and work something out. You will feel less stress and you’ll be happier when you resolve your tax debt as quickly as possible.

Debt About to Be Wiped Out?

It becomes more apparent with every passing month that America is bankrupt. And the dollar is quickly losing its status as the reserve currency of the world.

In the last couple weeks, the prices of gold and silver have spiked significantly. We may see prices of precious metals continue to rise rapidly as the dollar deteriorates.

At what point will the U.S. be forced to default on its obligations to other countries? At what point does the currency become worthless and be replaced by something else?

Just some things to think about.

If the U.S. defaults on its debts, it will practically force the rest of the world into bankruptcy. It will be a worldwide Jubilee of sorts. Or, at least that’s what I’m hoping for.

When this happens, it’s not a good idea to be a creditor. Far better to be a debtor, strange as that sounds.

Not that this provides an excuse to intentionally rack up big balances on your credit cards. Because what I’ve described above may not happen. Time will tell…

The Jubilee & Why We Need One

The Jubilee is a biblical concept concerning debt, and I’d like to cover it here because America — and, indeed, much of the world — is in desperate need of a Jubilee.

To understand what a Jubilee is, we first have to start with an understanding of biblical rest patterns. They are all built on the number “7” — which is the number of divine perfection.

And so every seventh day is called a Sabbath, or a day of rest. Most readers will be familiar with this concept since most religious institutions gather on they day they observe as the Sabbath.

When we take this biblical concept one step further, we see that every seventh year is called a Sabbatic Year, a year of rest.

Not only does God command a year of rest for the land during which no crops should be planted, He also commands the suspension of debts during the Sabbatic Year (Deuteronomy 15:1).

This means creditors are not supposed to collect payment on debts during the Sabbatic Year. Obviously, if all the people are observing a rest year, they will have no source of income with which to repay their debts.

The concept of a rest year is important because it plays out on an even grander cycle.

The third manifestation of the Sabbath concept is seven times seven years, or 49 years total. Every 49 years marks what is called “The Jubilee.” It is a year of release in which all debts are canceled. All men go free and return to their inheritance.

In a Sabbatic Year, there is only remission of debts. It’s like hitting the “Pause” button. After the Sabbatic Year is over, the debtor must continue to make payments against his debt.

A Jubilee Year is different because it’s a year in which all debts are canceled. It makes no difference how much a man owes. Every last penny of debt is forgiven, and he starts afresh during the new Jubilee cycle.

This is the mercy factor that is built into God’s law. Unfortunately, God’s law has been shoved aside by even “religious” people, and the biblical concept of debt forgiveness has been all but forgotten.

But right now, we don’t need a bloated stimulus package — we need a Jubilee. If our government were to declare a Jubilee, we could all start over. Of course, some would inevitably fall into debt again, but many would be more financially responsible.

Ultimately, I think a Jubilee would be a blessing for all people. Will our government declare a Jubilee? Probably not. Still, it is an important concept to understand as we try to deal with the weight of excessive debt.

How to Capitalize on Citi’s Collapse

So I had this hare-brained idea.

And it all started when I read Martin Weiss’s critique of the Citibank situation.

In fact, he believes it’s so bad, he titled yesterday’s editorial “Citigroup Failure Imminent.”

He wrote this yesterday… BEFORE the government agreed to bailout the Citi. Weiss predicted yesterday that the bailout would happen soon; it happened today.

Here is exactly what Weiss said:

They will soon announce a massive federal bailout that could make the $150 billion AIG rescue seem small by comparison.

And, ultimately, these kinds of bailout efforts will fail. [emphasis mine]

It is preposterous to assume that any government, no matter how powerful it may seem, can save the entire world. It is naive to believe that a few government bureaucrats, with a grab-bag of gimmicks and tricks, are a match for billions of consumers in revolt, millions of investors desperate to sell, and thousands of banks pulling in their horns.

The government cannot repeal the law of gravity and stop markets from falling. Nor can it turn back the clock to reverse our financial blunders.

All of this got me thinking. I’ve been getting a lot of balance transfer offers from the Citi.

Perhaps I should transfer my debt to them. And perhaps I should expect the Citi to crumble. And perhaps my debt will be buried in the rubble.

Get the picture?

If Citi totally went under, it seems to me all the debts would simply be erased. After all, how does a business that no longer exists collect on loans it made when it did exist? I just don’t think it’s possible.

Am I being unethical here to capitalize on the impending collapse of one of the world’s largest financial firms? Am I being foolish to think this way?

Leave a comment and let me know your thoughts.

How to Survive the Collapse of the American Empire

“Any doubt that we’re officially in a recession can be put aside.”Anthony Karydakis, former Chief U.S. Economist for JP Morgan Asset Management

Americans have been reluctant to admit that the U.S. is entering a recession. Perhaps the average citizen enjoys his ignorance and doesn’t want to hear the truth. Perhaps he has been brainwashed by patriotism and believes he must always be bullish on America. Or perhaps he simply believes that the U.S. is too big to fail.

No matter what beliefs lurk under the murky surface of America’s collective psyche, most folks want to continue believing the illusion that they can spend their way to prosperity.

And yet it seems we’ve reached the end of the line. The day of reckoning is finally upon us.

Personally, I think it’s hard to argue that the recession isn’t here, or that it’s only a temporary slump. For evidence, look no further than these inconvenient facts:

  • Circuit City has filed bankruptcy and is closing 155 stores by Dec 31, 2008. [source]
  • Starbucks profit is down 97%. [source]
  • Retailers have closed about 6,000 stores this year. [source]
  • General Motors is out of cash, on the verge of bankruptcy, and may not make it. If they go under, it could result in the loss of 2.5 million jobs. [source]
  • Freddie Mac lost $25.3 Billion in the 3rd quarter. The company is valued at negative $13.7 Billion. [source]
  • Unemployment assistance is at a 25-year high. [source]
  • U.S. home sales plunged 19 percent in one month, from Sep to Oct 2008. [source]
  • Retail sales fell by a record amount in October 2008. [source]
  • Hedge funds are set to implode as early as Monday, November 17, triggering a massive financial meltdown. [source1, source2]

You get the point. The economy is not looking good. Every major sector of the economy is being deeply affected — from home sales to auto sales, from mega-banks to small mom-and-pop shops.

The Associated Press article linked above writes: “The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.”

So, in light of all this, should we simply hunker down and wait for “the end”?

No, I don’t believe so. I believe there are proactive things we can be doing right now to prepare, most of which will cost you nothing. But first, let’s look at…

Damaging Beliefs to Avoid

1. Stop believing that all you need is an “abundance mindset” to make things better.

It ain’t gonna work.

I’m not a fan of the Law of Attraction or abundance thinking. They are the mental equivalents of a get-rick-quick scheme.

Thinking positively won’t make the recession go away or save you from hard times — although thinking positively may certainly help you to weather the financial storm.

2. Don’t become paralyzed by fear.

In a time like this, drowning in fear and doing nothing may be a natural response, but neither are helpful.

If you are a believer, it is helpful to remember that “There is no fear in love; but perfect love casts out fear” (1 John 4:18); and “God causes all things to work together for good to those who love God.” (Romans 8:28)

Do you really believe this?

If so, you can rest easy knowing that God is going to work all of this out for your ultimate good.

3. Resist the temptation of believing the economy will rebound “in early 2009.”

All over the news, the talking heads are proclaiming that the economy will rebound “in early 2009″ or, at the very latest, “the second half of 2009.”

While I would like to believe that’s true, I don’t believe it for an instant. And if you fall for it, you will be less likely to prepare for what’s ahead. Or worse, you might dismiss the current downturn as an aberration and keep going along your merry way, oblivious that destruction is right around bend.

So, for now, I encourage you to view the recession as something that is going to get worse — and then prepare accordingly.

Alas, Babylon the Great Has Fallen

What began in mid-September is no ordinary recession. And while comparisons to the The Great Depression have been floating around, it’s not even as good as that.

I personally believe we are witnessing the collapse of economic Babylon — that world system that has kept people in bondage for so long.

“And he cried with a mighty voice, saying,
‘Fallen, fallen is Babylon the great!.'”

-The Apostle John, writing in Revelation 18:2

As we examine the current situation, it is important to note:

  • All fiat currencies eventually collapse. The dollar is one of the longest-lasting fiat currencies in existence today. Translation: A collapse is not a remote possibility; it is a probability.
  • All world empires eventually collapse. The U.S. is the biggest world empire to ever exist. Its reach extends around the globe. Again, a collapse of the American empire is not a remote possibility; history tells us it is a strong probability.
  • When the U.S. falls, it will bring the world down with it. The U.S. economy forms the backbone of the world economy. When the financial spine breaks, it will cause worldwide paralysis.
  • Will we see Nazi America? Conditions in the U.S. are just like those that preceded Hitler’s rise to power in post-war Germany. Once the currency collapses and Americans are fully disillusioned, they will be more likely to turn over all their rights to a delusional political savior. With nuclear war looming, martial law may soon be coming to a city near you.

Step 1: Physical Preparation

Here are five simple strategies to implement when the American empire collapses and the dollar becomes worthless. (Remember: It’s not a matter of “if”… all major fiat currency collapses at some point, and America is due for a big one.)

The strategies are based not only on my own insight, but on how people handled currency collapses throughout history. Just think about Rome. Or post World War II Germany. What did those people do? I will tell you.

Let’s dive right in…

Strategy #1: Develop a skill of tangible value.

When there is no currency, people start to trade. It’s also called bartering. You have a physical item that I want. I have a physical item that you want. And so we trade item for item.

I cannot pay you with money if money has no value. For instance, the dollar has no real value. It is not backed by gold. Its value is the faith the American people place in the dollar. Once that faith is gone, the currency no longer has value.

So that’s why it’s important to have skills of tangible value. Let me explain what I mean when I say that…

Tangible means “real or actual.” It also means “material or substantial.” Also “capable of being touched; a tangible asset.”

Many white collar workers today have few skills of tangible value. They cannot fix things. They cannot build things. They cannot grow or harvest food.

All of these things have tangible value. Value that can be seen, touched, and felt.

If money becomes worthless, would you rather have a pile of money or a car? Of course, you’d want the car. What about a bike? Or even something as simple as a spoon?

A spoon would be worth more than all the money in your 401(k) if dollars become worthless… unless of course you needed heat, and you had the bills to burn.

So strategy #1 for surviving and thriving during the collapse of a currency is to develop new skills that have tangible value. For instance:

  • Gardening
  • Farming
  • Hunting
  • Fishing
  • Knot-tying
  • Metal smithing
  • Mechanical repair
  • Construction
  • Plumbing
  • Jewelry making
  • Pottery (making)
  • Distribution supply
  • Manual labor
  • Tooling
  • Etc.

Notice a pattern? All of the skills require manual labor. They are not “white collar” activities for the most part.

Of all of them, gardening will become the most important of all. How will you acquire food without money to pay for it? What will you trade for food? Why not grow your own food so you’re prepared for just such a time?

Unfortunately, most folks have little space for a garden. Much less space to farm. It may make sense in some cases to acquire a home with some acreage so that you will have space to grow fruit and vegetables and prepare for the future.

A question on a lot of readers’ minds will be, “How do I acquire these skills?”

My answer is simple. Go to your library and begin reading books that help you acquire new skills. There are many books on gardening, home repair, how to make crafts, etc. These are the real skills you’re going to need to survive in a barter-based economy.

Strategy #2: Exchange your money for physical goods.

I have a recurring vision in which years of labor (counted in dollars) evaporate overnight. As it is, Americans do not save much money. But save they do. Right now there are literally billions of dollars in 401(k) plans and other retirement vehicles.

Do you believe me when I say that it can all go away in single moment — one sudden flash of economic destruction?

Believe it, because it’s true.

When that happens, your 401(k) won’t be able to save you. It won’t even be able to provide you with a cup of cold water to drink.

This is why it’s so important not to put your trust in currency. All currency is is a convenient way for measuring value… to facilitate the trading of goods and services. It is not a fortress to trust in.

Why hoard dollar bills if they’re all going to go up in smoke? The answer is… you shouldn’t. Much better to exchange the dollars you earn for physical goods.

For instance, put some shelves in your house or basement where you can store canned food items. These items are cheap. But they’ll be worth far more to you later, after the dollar collapses, than they cost now.

As Thayer Watkins writes in his economic history of Germany, the results of post World War II collapse and recovery were not pretty: “The net result was an economic disaster and the creation of near-famine conditions.”

My advice: Get a good food collection going so you’ll have food enough to last for 6 months or a year. This is an affordable way to give yourself a nice time buffer to recover and figure out how you will live in the new barter-based economy.

Oh, and don’t forget drinking water. You never know what might happen to our drinking supplies in a major dollar collapse. You can live on water for about 40 days without food. But you can only live about three days without water. If I had to have one or the other, I’d pick water every time.

Another thing: Make sure you have modes of transportation apart from your car. If dollars are worthless, America will not be able to acquire oil, and many Americans will quickly run out of gas. How will they get around?

Answer: bicycles, inline skates, scooters… basically anything with wheels that is powered by a human.

Do you have a good bicycle? Would you be able to ride it if you had to? If you answered no to the first question, then get a bike. You’ll need one. If you answered no to the second question, then you might consider getting into shape… enough that you can ride a bike for a few miles if you had to.

If you don’t like to ride a bike, then get a pair of inline skates (Rollerblades). These can get you around quickly, even if you have a bag slung over your shoulder to carry things.

Have plenty of blankets and warm clothing if you live in an area that experiences cold weather. It’s possible that our traditional methods of heating will go away in the wake of a dollar crash. That means no natural gas to fuel furnaces. And that means cold houses. And that means you better have some thick blankets and warm clothing available. You might freeze without it.

It is possible I have overlooked some things. In case I have, simply review in your mind what you’d like to have in case money became worthless. Then, use your money to buy those items now so you’ll have them for later.

Remember: money in a bank or retirement vehicle that you intend to use for a comfortable lifestyle in your old age may not be worth anything at all after a currency collapse. Better to have real tangible goods on hand that can actually support and improve your daily living.

One last recommendation…

Exchange some of your paper money for precious metals like gold and silver. Historically, these investments do well when an economy collapses. You can then use your gold or silver to buy items you didn’t think to get before the collapse.

Strategy #3: Develop sources of income not dependent on U.S. buyers.

This strategy will be simple for some, harder for others. The idea being that you should diversify your income.

Instead of collecting a paycheck from one U.S.-based employer, become self-employed so that you have many clients supporting you.

Seek to do something that attracts clients from different countries, not just the U.S. Since I became a freelance copywriter, I’ve picked up many clients in Canada, and a handful abroad. This gives me a greater diversity of income than most people.

Even better than self-employment is to sell products (preferably information products) on the Internet. That way you can attract English-speaking customers from all parts of the world, including Canada, the U.K., Australia, Europe, Asia, and Africa.

With your income not tied to any one country, and diversified among hundreds of different customers, you’ll be more prepared in the case of an economic collapse in America.

Easy ways to get started are to sell products on Ebay, Clickbank, and Commission Junction. Or you can sell products directly without using these intermediary sites. All you need is a PayPal account to collect the funds.

Strategy #4: Get back to the basics of living.

This is somewhat related to Strategy #1, which is to develop a skill of tangible value. But this is more focused on the essentials of living, not the skills you need to survive in a barter-based economy.

The basics of living include food, water, clothing, and shelter. These are the physical essentials. They do not include intangibles like relationships or spirituality.

Let’s start with water. Where is the closest natural source of water to you? How far away is it? Do you have the right purification tools for cleaning the water and making it drinkable?

REI and other outdoor stores carry inexpensive water purifiers that are operated by hand. It would be good to have one available. Typically, one purifier is enough for two or three people. If you have a large family, get two.

Also, iodine tablets or droplets kill harmful bacteria in water. You may also want to have iodine on hand in case a purifier breaks.

Next, food. Do you know how to fish or hunt? Do you know what berries and roots are edible? Do you know how to dress a deer or gut a fish? Do you know how to grow common garden vegetables?

These are all important skills to have, especially if you’ve not stocked up on food. Look for a survival handbook of some kind and have it available. There are many in print, and they are extremely helpful for anyone, regardless of whether you’ve had survival training in your past.

How about clothing? Do you have garments for every season? More importantly, do you have quality shoes for walking… and quality hiking boots for long hikes? These will be indispensable in a world without cars.

Lastly, shelter. If you have a house, you’re probably in an okay position. If you’re renting, you may be more vulnerable. Even if you have a house, your mortgage could compromise your security. A bank could tell you to leave if your payments aren’t being made.

Assuming you cannot stay in your apartment or house, you ought to have some decent tents available. Perhaps just some small two-man tents for easy carrying, or perhaps a larger tent to sleep 4 to 6 people.

Even if you never use the tents, it will be good to have them.

Strategy #5: Have a plan for the worst-case scenario.

This may sound like a no-brainer, but it’s easy to overlook. You need to have a plan for what you will do in a worst-case scenario where the dollar becomes absolutely worthless.

That means no oil, no natural gas, no electricity. Assume that all the natural resources you depend on every day are cut off. Then figure out how you will live without them, at least for a while, until everything works its way out.

This is how you prepare for catastrophe. You anticipate what might happen and prepare a plan for how to deal with it. It doesn’t mean the catastrophe will happen… or that it will happen in the way you imagine it will… but at least you won’t get caught flat-footed, as so many unsuspecting Americans will.

Do you have relatives in town or a different state? How will you communicate with them? Will you join forces by living together… to take advantage of economies of scale?

What about entertainment… or otherwise occupying yourself when you have nothing else to do? If TV is no longer available, what will you do? Do you have books to read? Can you play a physical instrument? Do you even have a physical instrument that can be played?

I apologize if my questions seem too extreme. They are simply the questions you need to ask to be as prepared as possible.

Earlier I mentioned the possibility of a nuclear attack in the near future. Such an event would certainly upset the entire world, and could be the catalyst that sends America down the road to economic destruction.

In the case of a nuclear attack, no matter where on earth it happens, you will want to be prepared. How? By getting a supply of Potassium Iodate tablets.

In nuclear fall-out, it is of utmost importance that you protect your thyroid. It absorbs radiation quickly. To prevent that, you take Potassium Iodate tablets. These flood your thyroid with non-radioactive potassium so it cannot absorb the radioactive junk floating around in the air.

I purchased a supply for my family, plus a little extra, more than a year ago. I purchased the tablets at CampingSurvival.com. You can read their article about potassium iodate and buy some of your own here.

Step 2: Spiritual Preparation

More important than physical preparation is spiritual preparation. That’s because nobody knows what’s going to happen in the future. We can speculate; but we can’t foretell.

Furthermore, even if we knew what the future held, we wouldn’t know exactly how to prepare. We wouldn’t be able to anticipate every possible scenario and circumstance. You see, “There is a way which seems right to a man, but its end is the way of death.” (Proverbs 14:12)

That’s why I feel it’s so important to ask yourself: “Am I tuned in to God? Can I hear His voice and obey?”

The way I see it, nothing will be more important in the years to come than an intimate relationship with God. Only He has the vision, strength, and wisdom to see you through.

As Solomon wrote, “Trust in the Lord with all your heart and do not lean on your own understanding. In all your ways acknowledge Him, and He will make your paths straight.” (Provers 3:5,6)

Take some time to get to know your Creator on a more intimate level. The more you get to know Him, the more you’ll trust Him — and the more you’ll understand how completely He knows what He’s doing.

More Articles About the Recession

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