Last week I said I would present a solution to the foreclosure mess in today’s post. However, I was sidetracked by two pieces I read in a friend’s newsletter. Since they are about the recently passed housing bill, I think they are important. After you read them, you too may decide they are important.

The newsletter is: International Council of Online Professionals and is published by jl scott (sic). She is the Director of i-cop located at http://www.i-cop.org. The pieces were in the August 11, 2008 edition.

She gave me permission to reprint the two items as long as I left them intact with the proper attributions. Please pay attention to the ramifications of this thing called a housing bill.

As you read them you will notice several things, one of which is neither author is actively involved in real estate or real estate matters. These are two citizens who took the time to read the damned bill and discovered business as usual is the name of the game under the guise of helping people who are in a terrible life changing situation.

Housing Bill” Affects E-commerce Merchants
by Tom Mahoney

Last week, President Bush signed the Housing and Economic Recovery Act of 2008 into law. Sure, another law will fix it. Hidden in the 700-page bill are a couple of totally unrelated provisions.
One relates to hurricane recovery and gives tax breaks to a Canadian rail car manufacturer in Alabama. Of course, in true government style, this has nothing to do with housing relief but after all, someone had their hand out and got their hand-out.

There are also some provisions in the bill for home buyer credit; provided that you’re a first-time home buyer between April 8, 2008, and July 1, 2009, and make under $150,000 ($75,000 if you’re single.)
And there’s an additional $1,000 standard deduction against property taxes ($500 if you’re single.)
You wouldn’t think any of this has anything to do with E-commerce merchants that accept credit cards, but you’d be wrong. You’d be wrong because there’s also something in the law for us lucky merchants.
Starting in 2011, banks or other companies that process credit cards must report the amount of the payments a merchant receives on card transactions to the IRS. The law will not apply to merchants doing less than 200 transactions totaling less than $20,000.

We can all thank PayPal (thank you PayPal) that the exemption amount isn’t $600. Yep - they tried to make it $600, a whopping $50 per month, but PayPal successfully lobbied to raise it to the current level.
So, starting in 2011, even some smaller e-Bay sellers will have their income reported to the IRS.
Just thought you should know.
————
Tom Mahoney, Founder and Director of Merchant911.org
http://www.merchant911.org
————

More on the “Housing Bill”
by jl scott

I thought you should know, too. I’ve been watching this for a long time. But, as little as about two months ago, I read that Congress was rejecting it. Wouldn’t you know, they’d slide it through by hiding it in the “Housing Bill!”

And, you should know this will include third party processors such as 2CheckOut and PayPal (who Tom already mentioned).

Some self-righteous people will say, “So, what’s the problem? We all have to pay our taxes, anyway.”

True - But There are SEVERAL Problems …
Not the least of which is that government will now have access to information not just of the sellers but of the BUYERS.

Unless it is stipulated differently - which I would seriously doubt - everything you buy online will now be accessible by the U.S. Government - and it will not matter what country you live in.
It may not be on the original report, but it WILL have to be available to back up the data. And, if it’s available, they’ll take it any time they please.

Talk about lack of privacy!

Second, will be the additional paperwork for your tax preparer - which YOU will pay for. These reports to the IRS will ONLY state how much money you received. It will NOT show refunds or any charge-backs, etc. All that will have to be calculated.

Third - the merchant account companies are sure to increase fees. You can bet THEY aren’t going to pay for the extra help and hours to prepare these reports - YOU will.

Fourth - in the past, if the IRS wanted to get information from banks and merchant accounts, it required going to a judge and getting a subpoena. Now, the IRS can step in and audit at any time - with a little or no notice. (emphasis added by Tom Koziol)

I’ve been told by a CPA, who is also a registered agent for the IRS, this law MAY be repealed. SOMETHING definitely needs to be done about the loss of privacy for buyers. And subjecting innocent customers from around the world to surveillance by the U.S. Government, is truly unacceptable!

Don’t panic - but, don’t ignore this, either. Pay attention to whatever is coming next!

This was a rather long post but I thought if you didn’t know the government has pulled another end around your Constitutionally protected rights, you should. The bastards actually used a scammed up housing bill to put greater monitoring and reporting controls on us.

To anyone who says this isn’t germane, I say you probably don’t buy anything over the web or don’t have a web based – even if part time – business. If you use any of the online based foreclosure sites to locate properties, you could be a subject of this bill. If you use the web to make, or apply for, loans, you could be a subject of this bill.

The list goes on and on but I will stop there. I thank jl scott for having the foresight to print this material even though her site has nothing to do with housing or foreclosures.

As it turns out, my proposed solution will put an end to this kind of preying on the people by the politicians. Maybe the above information appeared at just the right time.

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Tags: Economy, George Bush, Housing and Economic Recovery Act of 2008, housing bill, housing law, politics

Yesterday in a special session the Senate passed the Housing Economic Recovery Act of 2008, H.R. 3221, with a 72 to 13 vote. This measure received such overwhelming bipartisan support so politicians could point to this legislation and say, “We are doing something to mitigate the foreclosure crisis”.

They aren’t.

This bill once converted to law with President Bush’s signature next week can’t and won’t do a thing to stem the drop in home prices which is what home owners and landlords need desperately. But with over 1.5 million households in foreclosure and elections in November, politicians did what politicians usually do…too little, too late.

I found the perfect quote to describe this new bill…

“Politics is the art of looking for trouble, finding it, misdiagnosing it and then misapplying the wrong remedies.” - Groucho Marx

Grouch had H.R. 3221 in mind when he made that statement. This bill is nothing more of a blank check to the Treasury Department to bail out the GSEs, Fannie Mae and Freddie Mac. Sure the Democrats slipped in a $5 Billion measure allowing states to buy and repair foreclosure properties. However, you and I both know this money will never reach the market in time and it’s a drop in the bucket anyway.

Paulson pushed hard for this legislation for the last 2 weeks telling every Congressman who would listen how our national credit worthiness with the world was at stake…our honor no less. It just goes to show how ill-equipped Congressmen are to spot a conman in action. Since when does bailing out two of the most profitable NYSE traded companies in recent history a national priority?

Paulson now has the power to grant unlimited credit to the GSEs and the power to buy their stock directly. This over-reaching power has never been given to the Treasury. The GSEs, especially Fannie Mae, are known for accounting scandals, huge campaign contributions to Congress, and multi-million dollar incentive-based compensation packages for top executives.

This is how we want to spend tax payer money?

Wall Street firms can’t seem to determine the extent of the subprime damage in their own portfolios, so how is Paulson going to it at the GSEs? The bad loans buried in the mountain of GSE owned debt - over $5 Trillion - could easily be well over $100 Billion at Fannie Mae alone.

My guess is this new law will cost the tax payers over the next few years about $200 Billion and not one dime will stop the slide in home values. Not one dime will go to help a family save their home from foreclosure which would help stabilize home prices.

Groucho…when you’re right, your right.

Tags: foreclosure legislation, Foreclosures, house foreclosure bill, housing bill, Housing Economic Recovery Act of 2008