Friday, September 10, 2010

Home owners destroyed by economy get shafted by IRS.

With no legaly clear definition of income available to the general public, and legal professions, the IRS is again allowed to run amuck and do what ever it wants, to whom ever it wants, when ever it wants.

Their latest victims are the home owners who are facing foreclosure. That is right. The hard working middle class that has already carried the burden of this country, and who are now being destroyed by the very government that it has paid for, are not only loosing their jobs, and their homes, but now the IRS is rubbing salt into the wound.

Here is how it works.

The citizen who has worked all their lives for some corporate company, bought a house 25 years ago, with a 100k loan they obtained from a local lender agency. A 30 year pay off, they owe just under 50k and 90 percent of their payment is going to principal now.

Then the economy drops out and Mr. Citizen is no longer making 45k per year, but instead is drawing 12k on unemployment insurance benefits, which are now being taxed as income, (thank you Ronald Reagan).

So our Mr. Citizen looses his home due to not payment and the bank repossesses it.
And Mr. Citizen is shocked to get a tax bill at the end of the year for income taxes on the 45k he did not pay back to the bank.

The bank took the property which the loan was used to obtain. So the bank got its money back.

The IRS contends that the original 100k loan was that - a loan, and since 45k was not paid back, then the entire 45k must be income that is taxable, received by the former home owner.

Since the former owner has limited resources, paying off the taxes on the 45k becomes a decade long struggle, due to late fees and interests which can be as much as the amount due itself.

I say Horse hokey. The amount is NOT income. The bank took the property, therefore there is no gain to the former homeowner. Never mind the fact the bank can't resell the property given the economic climate. They were stupid for foreclosing. They would have been better off working with the homeowner. Instead, many banking institutions have properties scattered all over that are sitting empty and desolate, many of which are being broken into by thieves and homeless people. The property these homes sit on, are not being kept up, and local cities are starting to rake in revenue by fining the property owners (the banks) for failing to keep the property in shape. Meaning the grass has to be cut properly,and cannot be too long. Cities can make even more money of they send their own work crews out to take care of a properties lawn. - they charge the owning bank up to 1,000 dollars for each trip they have to make to cut the grass at that location.

Mean while the former homeowner has lost his job, lost his house and is now loosing his mind due to the IRS's not being held to ANY standard of proper responsibility.