April 2022 Newsletter
PAYROLL PROBLEMS AT THE PBC TAX OFFICE: The California Employment Development Division [Unemployment Office] finally completed their nine-month mail-in audit of our heinous payroll and business activities. I am certain that they were distracted from their investigation of the $20 billion dollar unemployment fraud which was conducted from the California Prison System after the recent benefits increased. At any rate, we are still in business, and they billed us $220 for the 1099 payroll problem they found. I wish them luck with the giant fraud which seems well-disguised that they could not even find their individual who authorized funds to 1,900 unemployment applications from the same name and address in prison. Or the employee who approved them. But they found us like sitting ducks doing what we do best, tax preparation with 2 ½ employees.
VISIT CHICAGO AND STAY THERE: Last month the WSJ had an article about carjackings in Chicago. The Cook County Sheriff's Office rented a booth at the International Chicago Auto Show. It is a carjacking booth staffed by Deputies to warn attendees of the deadly dangers presented by the current wave of violent crime on Chicago streets. The carjackings are accomplished by motorists being ordered out of their cars and beaten or shot if they resist. One solution presented by the deputy was to install tracking devices so the vehicle can be located afterward. The most important solution presented here was the installation of BLEEDING CONTROL KITS in 269 public buildings. Each kit has enough medical supplies to accommodate up to eight victims until police or EMTs arrived.
Just today, the Cook County District Attorney tried to release a man who hammered another to death and dragged the body down three flights of stairs to hide him in a bush. The man, who was on parole for another violent act, was caught at the scene with blood all over him, the victim’s wallet in his pocket, and confessed the murder at the scene. Yet, the District Attorney tried to get the charges dropped. Ever wonder why there is so much crime in some cities?
NEW TAX FORMS IN THE MAIL: The IRS form 1099K will soon be more available for audits. This form is a year-end recap of monthly sales from Venmo or PayPal or other credit-debit card transactions. Before 2022, it took $20,000 or more than 200 business transactions to ring the bell to receive this form. Under our present Democratic Administration, effective this year, the threshold will be only $600. Accordingly, there will be millions of these things going out to everybody at year-end. Stimulus payments were a filing nightmare, but this will be worse because every 1099 form is a proposal for more taxation. Last year the Biden Administration proposed to have banks report aggregate deposits and withdrawals over $600 on 1099 interest forms, but the Republican Congress squashed it. It looks like they missed another one.
STIMULUS PAYMENTS AGAIN: This tax season there were many problems with the stimulus payments which were electronically sent to your bank account or by a mailed credit card. The Treasury also mailed letters describing the amounts sent. We asked our clients to show the amounts received on our form at interview time. There were many errors here from the event a year prior. We posted the reported amount to the tax return and the IRS compared it with their data and adjusted the tax return according to whether you had underreported or overreported the actual amount. To compound the situation the Govt. was adjusting the amount to the income qualifications from the current return being filed. This situation was out of our control and resulted in various computer letters and tax changes.
CALIFORNIA NEWS: National Enquirer reports that our governor has announced legislation for $20.000.000 funding to bring expectant mothers from other states to California for an abortion. If this becomes effective, will make our state the abortion sanctuary of the country and result in an increase of California abortion clinics to over 29% nationally.
LATEST INTEREST RATES FROM TODAY’S WALL STREET JOURNAL: Prime Bank lending Rate 4.0%, Long Treasuries 2.91%, 30-year Mortgages 5.6%, New Autos 4.34%, Money Market .7%, Five-year CDs .9%. The IRS is now paying 4% on refunds which are delayed over 45 days. These are huge penalties for being slow and late processing tax returns. This past year, the Treasury paid over $3 billion of delinquent charges.
In a time of official 8.5% inflation and a declining stock and bond market, it is obvious that the Good Old Days [GOD] of high-interest rates are far from recovered. The years of spiraling double-digit earnings reached the apogee last year-end. This first quarter S&P equities are off -4.6%, along with Bloomberg bonds also down -5.93%. Government and private pension funds are also under pressure to reverse their losses currently. We have certainly recovered from the crash of 2008-9 with new highs and then some.
REAL ESTATE VALUES: After a booming sales market with prices skyrocketing all over the country, things have leveled off. My real estate appraiser client advised me that four months ago, after the interest rates rose, prices had begun to slow down. I like to look at Zillow for their Zestimate, which is three months behind the curve, and was aware of the slowdown. This month I noticed that the prices have started moving from inching up to slightly down. There is a huge problem of affordability between the soaring prices and higher interest rates. This was my observation. My prediction is that prices will stay high, but level off throughout most of the year and will fall off sharply with the coming recession.
LATEST COMMODITY PRICES: Crude oil barrel $103- with futures well above $100-, Silver troy ounce $22.50, Gold troy ounce $1,857-, Platinum troy ounce $949.80.
LATEST BATTERY EV METALS [COMPOUNDS tons]: BMI Lithium Carbonate $72,175-, Lithium Hydroxide ton $72,775, BMI Cobalt Sulphate $17,100-, BMI Nickel Sulphate $6,916-, BMI Flake Graphite $730-. All from China. Note that an electric auto has 400 pounds more aluminum and 150 more pounds of copper than a conventional auto. And that does not include the cobalt, lithium, and stainless steel. Lithium prices are up 1,000%, copper and aluminum 200%, nickel 300%, over the past two years, and the age of electric cars and more new [mandated] all-electric houses have barely begun.
PERSONAL EVENTS: We were subjected to a new experience with our Rock & Roll Murder book being counterfeited. The fraudsters copied the whole book and gave it a new name, author, and cover. It is now in the hands of the Library of Congress, Amazon, and the FBI. At least somebody likes it.
WHERE TO PARK YOUR FUNDS and INVESTMENTS FOR SAFE & GOOD EARNINGS: Preservation of capital and guaranteed earnings to offset inflation are now important. We offer insurance annuities with shorter terms and guaranteed principal and high earnings. We have one insurer offering 3.95% for a five-year contract, another offering 4.3% for a six-year contract, and another 5.05% for a seven-year contract. These different insurers all offer 10% penalty-free withdrawals, no taxes until disbursed, full account paid on death. Compare that to bank CDs or money market savings at 1% or your broker accounts which all charge administrative fees of 1 ½% annually.
Sorry about the late letter this month. We added 100 new clients this year and were absolutely buried for a while. Now we are working our way through the extensions before our vacation later this month.
Please do not hesitate to contact us if there are any problems or appointments for annuities [which are currently in extremely high demand].
Best wishes to all my friends and clients.
Phil Chute, EA.