Economic stability attainable with financial responsibility

September 8, 2009
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I have become increasingly concerned about the ads that offer legal help in tax and credit card debt reduction. They really sound good — like the attorneys’ advertisements for personal injury lawsuits. You can act irresponsibly and not be held accountable. The Kiplinger Tax Letter of Aug. 20 first states that the IRS is about to crack down on the offer in compromise mills. The IRS plans to levy large penalties and possibly criminal fraud charges for misleading claims. It is about time. There is still the question as to why these ads are successful.

Our entire economic system is based on trust. Credit is a function of trust. Without trust in contracts, our economic system fails. Last fall’s economic collapse was caused by greed overwhelming common sense and integrity.

We now have ads running regularly attempting to persuade people that it is alright to walk away from obligations because the creditor is despicable. No question there. The problem is that regardless of the public perception of the creditor, if money is owed, it must be paid.

The IRS is one of the most vilified institutions in America. This anger is misguided. Did you ever notice that there is not a little ditty about Lizzy Borden’s axe? (Lizzy Borden got an axe and gave her mother 40 whacks. When she saw what she had done she gave her father 41. Close the door. Lock and latch it. Here comes Lizzy with a brand new hatchet.) Lizzy Borden is the issue, not the axe. The IRS is the axe. Congress is Lizzy Borden. You are her parents. Congress is your persecutor. The IRS is the tool used to enforce an illogical burdensome tax system. Our tax system is horribly flawed and needs total reorganization. That’s the job of congress, not the IRS.

That being said, you should pay your taxes. I have been involved in tax advocacy since 1975. It is very hard to get people to put up time or money to change the system. As long as small business rolls over and accepts this system, it will remain the law of the land. Change the law or follow it. It may get a lot worse soon. Small businesses are so weak politically that they may actually be forced to become responsible for the health care of their employees. Have you contacted your representative? If not, you are as much to blame as anybody.

Credit card company tactics are despicable. But you have to play into their hands for them to abuse you. If you have lived beyond your means through credit card debt, you are going to have to live beneath your means to pay them back. Easy credit is like drugs. It allows for a sense of success and prosperity that has not been earned. One of the great threats to our economy is people and organizations not differentiating between earned and borrowed money. Washington and Lansing are prime examples. Their chickens will come home to roost. The problem is that they will roost in your hen house.

Economic stability is not attainable without financial responsibility. These are very difficult times and people are grasping for help. My understanding of the debt reduction advertisements are that they are scams. They charge big fees and results are not guaranteed. Grand Rapids has an exceptional community of financial professionals. Ask friends and associates for a referral. If you hire a local professional, the fees should be reasonable and outlandish claims absent from the negotiations.

Paul A. Hense, CPA, is president of Hense & Associates, a local accounting firm. He also is past chairman of the National Small Business Association and the Small Business Association of Michigan.

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