“Quest for the Perfect Credit Score” by Ismat Sarah Mangla, Money Magazine

(MONEY Magazine) — A major league pitcher dreams of throwing a perfect game. High schoolers eyeing the Ivy League study furiously in hopes of earning 2400 on the SAT. Meanwhile, Chris Peplinski is pursuing his own brand of flawlessness: an 850 credit score.

The 37-year-old stay-at-home dad from Rogers, Ark., has already nabbed 813 on the FICO scale, the credit scoring system most lenders use in sizing up potential borrowers.

That ranks him above more than 82% of Americans and comes with a big payoff: It entitles him to ultralow rates on loans, saving him tens of thousands of bucks over a lifetime.

Nevertheless, Peplinski won’t be satisfied until he hits the maximum: 850. Why? “Your credit score tells a lot about you,” Peplinski explains. “A high score means you’re responsible and in control of your life. You’re trustworthy.”

To reach his goal, Peplinski voraciously reads up on every element that goes into a FICO score, checks his number every three months, and tweaks his behavior to eke out every possible additional point.

Two years ago, he took out a car loan even though he and his wife, Chrissy, had the cash to buy their wheels outright. He figured that adding to his mix of credit might boost his score.

The reality is that you don’t need to catch the unicorn to catch the best rates. But adopting some of the habits of Peplinski and other members of the 800 club can help you improve your own score.

And that can translate into real money: On a $300,000 30-year fixed-rate mortgage, the most credit-worthy borrowers will pay $14,200 less than those one tier below, $25,600 less than those two tiers below.

FICO, the Minneapolis company that produces the scoring model, divulges the five factors that determine your magic number — your payment history, the amount you owe on credit lines and loans, the length of your credit history, how much new credit you’ve applied for, and the types of accounts you’ve had — plus what percentage of your score each factor represents.

But as for exactly how many points you’ll gain or lose for, say, taking on a mortgage, being late on a bill, or charging credit cards up to the max? That’s proprietary information: “It’s a black box,” says FICO spokesman Craig Watts.

Mystery feeds obsession. Much the way fans of TV’s Lost met up online to postulate theories on the show’s ending, some credit score aficionados passionately debate their hypotheses on message boards like the FICO Forums at myfico.com. Others use themselves as guinea pigs to discover which moves will nudge a score up or down.

While most people could tell you their number only from the last time they got a loan — if at all — true FICO fiends know their score as well as they know their spouse.

Of the score strivers MONEY interviewed, most check their score obsessively, at least every few months — at a cost of $50 or more a year. They also fixate on their credit reports, upon which the scores are based.

Leland Lim, a 41-year-old doctor from the Bay Area, is vigilant about scanning these for errors that might drag down his number. “It took me three years to get a derogatory entry on one of them corrected,” says Lim, who now earns an 806.

As for what makes an 800-plus score, these self-made experts basically say the same thing FICO does: Payment history is the single most important factor.

“I have this fetish about paying bills as soon as they come in the house,” says Dick Husemann, 66, a retired Air Force officer from Wilmington, N.C. He and his wife, Brenda, 69, attribute their high scores — matching 818s — to the fact that they’ve never missed a credit payment.

The Husemanns also never charge more than 10% of their credit limit. They’re not alone in that; most score enthusiasts aim to keep a low “utilization ratio,” or the amount they owe compared with the amount of credit available to them. FICO verifies that a low ratio can help your score.

Chris Peplinski used his knowledge of this principle to help his wife boost her number. When they met seven years ago, Chrissy’s credit cards were maxed out and her score was a low 466. (Today he jokes: “I tell people when they’re dating someone new, ask about your date’s credit score!”)

Chris helped her get on a repayment plan. A sales manager for General Mills, Chrissy now has tons of available credit she’s not using and a score of 786. Chris occasionally applies for additional credit cards to goose the couple’s credit lines further, even though he knows the FICO model will ding his score in the short term for opening a new account.

That kind of gamesmanship is all part of the quest for 850. With lenders now routinely closing inactive accounts, Lim rotates all his credit cards into circulation so that he’ll continue to have a lot of available credit to figure into his utilization ratio.

But because his charges also affect that ratio, a few months before applying for a loan, he stops using the cards or pays them off before the statement is generated. That way, he says, “my score jumps a bit” — just in time for the lender to see.

The 800 club members are also conscious of their mix of credit.

Lim became interested in the scoring process two years ago while refinancing a home-equity loan into a home-equity line of credit. Having heard that revolving debt could affect a score more than an installment loan, he studied up.

His research revealed that HELOCs are not considered revolving debt in the FICO model. (The scoring firm confirms.) And remember that car loan Peplinski took out even though he didn’t have to? He did it because FICO favors those with a variety of credit types, such as mortgage, credit cards, and auto loans.

“I probably paid $100 in interest,” he says. “But it was worth it because we raised our credit scores by 15 points.”

My favorite quote from the article: “Whites don’t own Abraham Lincoln. Blacks don’t own Martin Luther King. Those are American icons, American ideas, and we should just talk about character…honoring character.”

Washington (CNN) — In what resembled more a revival than a political rally, conservative talk show host Glenn Beck urged the large crowds at his “Restoring Honor” event Saturday to “turn back to God” and return America to the values on which it was founded.

“Something beyond imagination is happening,” he told participants who packed the National Mall in Washington. “America today begins to turn back to God. For too long, this country has wandered in darkness.”

The rally drew fire for its timing and location.

People filled the park by the Lincoln Memorial’s reflecting pool, in the shadows and echoes of the most pivotal civil rights address in America’s history — the Rev. Martin Luther King, Jr.’s famous “I Have a Dream” speech, which he delivered there 47 years ago.

Some of those who marched with King said Beck had usurped the day for his own political gain. The Rev. Jesse Jackson told CNN that Beck was mimicking King and “humiliating the tradition.”

Other civil rights activists gathered nearby with the Rev. Al Sharpton and his National Action Network in a “Reclaim the Dream” rally. Participants marched from a high school in northwest Washington, D.C., to the site of the future Martin Luther King, Jr. National Memorial, just a few blocks from the Lincoln Memorial.

Beck said the site of his rally was appropriate to reflect on the legacy of King, “the man who stood down on those stairs and gave his life for everyone’s right to have a dream.”

A hero to many conservative voters across the country, Beck said his rally was nonpolitical and its mission was to honor American troops.

He struck a spiritual tone throughout the day, saying his role was to wake America up to the backsliding of principles, values and most importantly, faith. Earlier, he said “God dropped a giant sandbag on his head” to push him to organize the event.

“Look forward. Look West. Look to the heavens. Look to God and make your choice,” he said. “Do we no longer believe in the power of the individual? Do we no longer believe in dreams?”

Beck, keenly aware of his critics, opened the rally shortly after 10 a.m. with the national anthem and immediately drew attention to the large crowd that stretched for six city blocks from the Lincoln Memorial along the parks surrounding the reflecting pool.

“I have just gotten word from the media that there are over 1,000 people here today,” Beck said sarcastically.

“We are humbled that you are here,” he said. “The reflecting pool holds about 200,000 people. This field back here holds about 250- to 300,000 people. They are not only full here, they’re full in that field, they’re full behind me, and they are now across the street approaching the Washington Monument.”

Tea Party activists from across the country attended the event.

Speakers included former Alaska Gov. Sarah Palin, a Fox News contributor, who said she came to speak not about politics but as “something more” — as the mother of a soldier. She said America’s men and women in uniform exemplified the virtues and values of America.

“Say what you want to say about me, but I raised a combat vet and you can’t take that away from me,” she said to a crowd that broke out in chants of “U.S.A! U.S.A!”

She also noted the anniversary of the famous civil rights speech, saying, “We feel the spirit of Dr. Martin Luther King, Jr.”

“We are so honored to stand here today,” Palin added.

Rally organizers said Saturday’s event was not political and asked participants not to carry signs, unlike past Tea Party demonstrations. The atmosphere Saturday was almost festival-like and participants were careful to say: “We’re not angry.”

Sue Maliszewski of Phoenix, New York, described herself as not conservative but someone who feels that her beliefs are no longer reflected in government.

“I believe that we are dysfunctional as a country,” she said.

“I believe it’s hopeless unless we get back to our roots,” Maliszewski added. “And that means our faith, and it means, reorganize our time. We have been so busy earning a living and raising our children that we have let different small groups overpower our opinions. And we’re here to … reclaim what’s wonderful about this country.”

Beck had been heavily promoting the event on his Fox News Channel program and on his radio broadcasts. He said that the timing of the rally wasn’t intentional.

“It was not my intention to select 8-28 because of the Martin Luther King tie. It is the day he made that speech. I had no idea until I announced it,” he said on his radio show in June, soon after the announcement of the rally.

“Whites don’t own Abraham Lincoln. Blacks don’t own Martin Luther King. Those are American icons, American ideas, and we should just talk about character, and that’s really what this event is about. It’s about honoring character,” Beck said.

Alveda King, a niece of the late civil rights leader, also participated in the “Restoring Honor” rally, saying that her uncle would have approved of the event.

“If Uncle Martin could be here today, he would sure commend us of giving honor where honor is due,” she told a large, cheering crowd.

King said earlier she’s been accused of hijacking “the dream,” but on CNN’s “Anderson Cooper 360″ on Friday night, she said “the dream” is in her genes.

“I don’t have to reclaim the civil rights movement, I’m part of the civil rights movement,” she said, noting her family’s home and her father’s church were bombed when she was younger. While the NAACP put out a cautious statement regarding the rally, there has been plenty of criticism of the event.

Lenny McAllister, an African American Republican, was asked by the Tea Party to speak at Saturday’s rally but declined. He said the rally was disrespectful to the Rev. Martin Luther King, Jr.

“I cannot sit on stage and co-sign on this irresponsibility,” he said. “I made sure I wore my elephant pin today. I am a proud Republican but I am also a proud African American man.”

But Lloyd Marcus, another black Republican, said he supported Beck’s efforts.

“Go Beck,” he said. “This is a fantastic rally and the people there don’t give a hoot about race.”

CNN’s Paul Steinhauser, Kate Bolduan and Rachel Streitfeld contributed to this report.

Bloomberg News won another battle in its war to force the Federal Reserve to disclose details of its massive lending program during the financial system bailout.

The full U.S. Court of Appeals in New York has refused to review a March decision by three of its judges requiring the Fed to release records of the $2 trillion in emergency loans it extended to banks and other institutions beginning in 2008.

From Bloomberg:

Unless the court stays its decision, the Fed will have seven days to disclose the documents. In the event of a stay, the central bank and the Clearing House Association LLC, an organization of 20 commercial banks that joined the Fed in defense of the lawsuit, will have 90 days to petition the Supreme Court to consider their appeal. The Clearing House has already said it will ask the high court to rule on the case.

A Fed spokesman said the central bank was “considering our options.”

Bloomberg sued the Fed in November 2008, arguing that the public has the right to know the names of the banks that borrowed from the agency, the amounts of the loans and what kind of collateral was posted.

The Fed has argued that releasing that information could cause “irreparable harm” to the banks that got the money, presumably by labeling them as the weakest links in the financial-system chain, at least at the time. The Fed also fears that banks facing short-term distress in the future might be unwilling to turn to the Fed — in its legal role as “lender of last resort” — if they knew that their borrowing would become public knowledge.

The central bank is required under the new financial reform law passed by Congress this summer to disclose certain information about its lending by Dec. 1, but it has continued to fight to keep private the details that Bloomberg wants to publish.

– Tom Petruno

If you’re a CPA, consider sending a letter to the IRS about the new proposals. The AICPA has drafted a sample letter for us to use. You can cut and paste this into an email to *public_liaison@irs.gov.

Subject line: IRS should slow down implementing tax preparer registration proposal

Body of email:

I urge the IRS to exempt CPA firms from the requirement to register their employees who are non-signing tax return preparers, and I urge the IRS to delay the implementation of its preparer examination.

I am a CPA and I support the goals to increase compliance and raise the ethical conduct of paid preparers embodied in your proposal to regulate paid income tax preparers. However, the costs and burdens of this proposal go too far, too fast – we need to see a reasoned, rational approach that creates benefits that outweigh the burdens on the CPA preparer community and ultimately the tax-paying public.

CPA firms stand behind the work done by the CPAs and employees of their firms. Requiring PTINs on tax returns should give the IRS enough information to track and weed out incompetent preparers, WITHOUT the need to require PTINs for non-signing preparers who work at CPA firms. CPAs are already regulated by state boards of accountancy and Treasury Department Circular 230, so I believe strongly that the PTIN requirement should not be extended to non-signing preparers at CPA firms.

I also feel strongly that the exam component should be delayed until evidence is gathered that proves the need for such an exam. The goal is to raise competency and ethical conduct; therefore, the PTIN tracking proposal should be given time to do just that, before layering on potentially unnecessary and redundant regulatory burdens on CPA firms in particular, and on all preparers and the public. In addition, I have concerns about certain aspects of the proposed Circular 230 rules that were recently released.

I request that the IRS: (1) exempt CPA firms from the non-signing preparer requirements of the proposed regulations, and (2) delay the implementation of the exam requirement until the PTIN process is fully implemented and results are known.

Thank you for your consideration of my thoughts on these important issues.

###

If you would like to read the AICPA’s views on the proposal, visit: http://tinyurl.com/2cfq7ua

Use a Timer to Stay Focused

Bloomsburg Business Week

By Allan Sloan, CNN Money.com

FORTUNE — There’s real money in the world, then there’s funny money — stuff that looks real, but isn’t.

Today, let’s talk about one of the world’s biggest piles of funny money — the $2.54 trillion Social Security trust fund. The trust fund matters now, because Social Security revealed last week that it plans to tap it for $41 billion this year, and will begin tapping it on a regular basis in less than five years. This year’s cash deficit, the first since the early 1980s and the biggest ever, means the Treasury will have to borrow money to redeem some of the trust fund’s Treasury securities. Even at a time when Uncle Sam is borrowing $1.5 trillion a year to keep his checks from bouncing, $41 billion is real money.

Here’s why the trust fund has no economic value. Let’s say I begin taking Social Security when I hit the full retirement age of 66 later this year. Because its tax revenues are below its expenses, Social Security would have to cash in about $3,400 of its trust fund Treasury securities each month to get the money to pay my wife and me. The Treasury, in turn, would have to borrow $3,400 from investors to get the money to pay Social Security. The bottom line is that the government has to borrow from investors to pay me, regardless of how big the trust fund is.

It’s not surprising that Social Security is now running a negative cash flow — I predicted a year ago it was likely to happen this year, and wrote in February that it had happened.

Democrats, for the most part, say everything’s fine because the trust fund has a fat balance. Republicans, who were happy to have Social Security taxes subsidize tax cuts for 25 years, have suddenly developed holier-than-thou fiscal rectitude. They’re both wrong — the Democrats financially, the Republicans morally.

Let me show you in two different ways how useless the trust fund is. The first is a quote from the introduction to the 2009 Social Security trustees report, the second is the graphic by my Fortune colleague Robert Dominguez that accompanies this article.

The 2009 quote, spotted by Allen Smith, economics professor emeritus at Eastern Illinois University, and author of The Big Lie: How Our Government Hoodwinked the Public, Emptied the S.S. Trust Fund, and caused The Great Economic Collapse, is telling.

It says that, “Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.”

In other words, the trust fund is of no economic value.

This sentence wasn’t in the 2010 introduction, released last week. Treasury says it still stands by it, but that the Social Security trustees decided not to include it this year because it merely reiterates the obvious.

Now, to the “Geithner bond,” which shows how easy (and useless) it would be for Treasury to stick as many bonds as needed into the trust fund, and declare Social Security to be sound forever.

You know, of course, why this wouldn’t work — at least, I hope you know. It’s because the U.S. government ultimately has to pay its bills with cash, not with its own IOUs. In the long run, you need cash — real money — not funny money. Other than being a send-up, this hypothetical Geithner trust fund bond is no different than the Treasury bonds the trust fund owns, except that it carries a higher interest rate.

There are ways, even at this late hour, to begin turning the trust fund from funny money into real money without unduly stressing the government’s finances. (I’ve discussed them before, and will do so again, but not today.) Given that taxpayers are bailing out the most imprudent companies and people in the country, we damn well should bail out Social Security, the mainstay of low- and middle-income people.

But let’s not kid ourselves that a fat trust fund is the solution. When Social Security’s cash deficits begin running more than $100 billion a year within a decade, it’s going to take a lot of money to keep the checks coming. And it sure won’t be funny.

NEW YORK (Reuters) – Dozens of U.S. billionaires pledged on Wednesday to give at least half their fortunes to charity as part of a philanthropic campaign by two of the world’s richest men — Warren Buffett and Bill Gates.

Based on Forbes magazine’s estimates of the billionaires’ wealth, at least $150 billion could be given away.

Among the rich joining The Giving Pledge campaign are New York Mayor Michael Bloomberg, media moguls Barry Diller and Ted Turner, Oracle co-founder Larry Ellison, “Star Wars” movie maker George Lucas and energy tycoon T. Boone Pickens.

A total of 40 of the richest people in the United States, including Microsoft founder Gates and investor Buffett, now have taken the pledge.

Since launching the campaign in June, Buffett, Gates and his wife Melinda have spoken to about 20 percent of the wealthiest people in the United States — 70 to 80 billionaires — in a bid to persuade them to give away their fortunes.

“In most cases we had reason to believe that the people already had an interest in philanthropy,” Buffett said. “It was a very soft sell but 40 have signed up.”

“We’re looking forward to enlisting many of these 40 to go out and make some calls also so we can report an even greater milestone but we’re off to a terrific start,” he said.

The campaign asks U.S. billionaires to give away at least half their wealth during their lifetime or after their death, and to publicly state their intention with a letter explaining their decision.

Gates has an estimated $53 billion fortune, which places him second on the Forbes magazine list of the world’s richest people, and Buffett, who made his fortune with insurance and investment company Berkshire Hathaway Inc, ranks third on the list with $47 billion.

The Giving Pledge does not accept money or tell people how to donate their money, but asks billionaires to make a moral commitment to give their fortunes to charity. “The idea is not to tell anybody when or how to do it, but at least offer what others have learned,” Buffett said.

Many billionaires taking the pledge have already been active in philanthropy in everything from genetic and cancer research to education, gun control and libraries and the arts.

TAX BREAK NOT A MOTIVATION

“I’ve long stated that I enjoy making money, and I enjoy giving it away,” energy tycoon Pickens, who is worth about $1 billion, said in his Giving Pledge letter. “I’m not a big fan of inherited wealth. It generally does more harm than good.”

Buffett and Gates will hold several dinners later this year to recruit more billionaires, and members of The Giving Pledge also will meet annually to discuss their philanthropy.

The pair also are due to meet with some of the wealthiest people in China in September and India in March.

“We … hope that this catches fire in some other countries,” Buffett said. “If they want to take what we think is a good idea and run with it, we will be cheering.”

Forbes said the United States is home to 403 billionaires, the most of any country. Individual Americans gave more than $227 billion in 2009, according to the Giving USA report by the Center on Philanthropy at Indiana University, down just 0.4 percent from the previous year despite the U.S. recession.

“I have always thought that the best thing to do is to make the world better for your kids and your grandkids rather than just give them some money,” Bloomberg, who is worth $18 billion, told reporters. “Your kids get more benefit out of your philanthropy than your will.”

Buffett said none of the members of The Giving Pledge were driven by tax breaks. “Not one has talked to me about taxes,” he said. “Anybody who is entitled to take a tax deduction takes it but I think the motivation goes far, far beyond taxes.”

Real estate and construction billionaire Eli Broad, venture capitalist John Doerr, media entrepreneur Gerry Lenfest and former Cisco Systems Chairman John Morgridge joined Gates and Buffett when The Giving Pledge was launched in June. Another 34 members were announced on Wednesday.

Buffett pledged in 2006 to give away 99 percent of his wealth to the Bill & Melinda Gates Foundation and family charities. Bill and Melinda Gates have so far donated more than $28 billion of their fortune to their foundation.

The full list of billionaires and their letters can be seen at www.thegivingpledge.org.

“Using an Offer in Compromise”

TAX PRACTICE & PROCEDURES

Editor: John L. Miller, CPA

In these economic times, more taxpayers are not able to fully pay their federal income taxes when due. There are several methods that may be used to pay tax liabilities in this situation, one of which is an offer in compromise (OIC).

Sec. 7122 permits the IRS to compromise a tax liability on one of the following grounds:

• Doubt as to liability;
• Doubt as to collectability; or
• To promote effective tax administration because either collection of the full amount would cause economic hardship for the taxpayer or compelling public policy or equity considerations provide a sufficient basis for compromising the liability.

This item focuses on offers when there is doubt as to collectability.

Submitting an Offer

A taxpayer makes an offer by filing Form 656, Offer in Compromise. Form 656-B, Collection Information Statement for Businesses, contains detailed instructions for completing the Form 656. In addition to the application, the taxpayer must send a $150 application fee with the offer. This fee can be abated if the monthly household income is not more than the IRS’s low-income guidelines. Moreover, other than for the low-income exceptions, if the taxpayer makes a lump-sum cash offer, 20% of the amount offered must be included with the offer. The payment is not refundable even if the IRS denies the offer. This payment rule has been in effect since 2006 and has resulted in a decline in the number of submitted offers. One of the current administration’s legislative proposals is to repeal this requirement.

If the taxpayer makes an offer to pay the tax liability using installments, the first payment must be paid with the offer, and the installment payments must be made while the offer is being evaluated. The IRS will return the offer without any appeal rights if the taxpayer does not make the payments as outlined.

The IRS has to act on an offer within two years. If it does not accept or reject the offer within two years, the offer is considered to be accepted. The statute of limitation is suspended while an offer is under consideration.

The IRS offers three types of payment plans:

• Lump-sum cash offer: The offer amount is paid in five or fewer installments;
• Short-term periodic payment option: Payment is made within 24 months from the date the offer is submitted; and
• Deferred periodic payment: Payment is made over the remaining statutory period (normally a maximum of 10 years) for collecting the tax.

Observation: To increase the chances of acceptance, a taxpayer should offer to pay all the money at once, if possible, because the IRS usually does not want to wait two years to get full payment. If full payment is not possible, a taxpayer should attempt to pay at least half of the total offer shortly after the IRS has accepted it and pay the remainder in monthly installments.

An individual taxpayer uses Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, to list required financial information. Form 433-B, Collection Information Statement for Businesses, is for use by a partnership, a limited liability company, or a corporation.

Calculation of the Amount to Offer

The minimum offer amount that the IRS will accept, except in certain special circumstances, is based on the taxpayer’s reasonable collection potential (RCP). The RCP is the total net value of the taxpayer’s assets minus allowable exemptions for certain assets, plus the difference between monthly income and expenses multiplied by a factor based on the type of plan and the time period in which payments will be made. Taxpayers calculate this amount on a Form 656-B worksheet using financial information taken from Forms 433-A and 433-B to determine the current fair market value of all assets less any loan balances thereon and the difference between monthly income and monthly living expenses.

Note: As discussed in more detail below, when investigating the offer the IRS is free to adjust the RCP calculated by the taxpayer upward or downward based on the taxpayer’s specific facts and circumstances.

Processable Offers

The IRS will reject an offer immediately if it is not processable. The IRS considers offers to be processable when received unless one or more of the following problems exist:

• The taxpayer or tax liabilities are not properly identified;
• An out-of-date Form 656 is used (or the terms on the printed Form 656 are changed);
• No amount of money is offered;
• Required financial statements are not provided or are otherwise incomplete or missing required signatures;
• The amount offered is less than the value of the taxpayer’s assets;
• A Social Security or employer identification number is missing, incomplete, or incorrect;
• The offer is not properly signed; or
• The offer is submitted to delay or impede IRS collection efforts.

Investigation of an Offer

The IRS recently announced that its employees will be allowed to consider a taxpayer’s current income and potential for future income when investigating an offer in compromise and negotiating an offer amount. The usual practice is to judge an offer amount based on a taxpayer’s earnings in prior years. The agency may require that a taxpayer entering into an offer agree to pay more if his or her financial situation significantly improves.

Section 5.8.4.4.1 of the Internal Revenue Manual provides that IRS investigators may consider assets held by the taxpayer, earning power, amounts collectible from third parties, and assets available to the taxpayer that are beyond the reach of the agency in determining the collection potential.

In a doubtful collectability case, the investigator must consider the taxpayer’s ability to pay in calculating the taxpayer’s reasonable collection potential. The taxpayer’s ability to pay is determined using an estimation of the taxpayer’s allowable expenses (i.e., the taxpayer’s basic living expenses). Unless there are special circumstances, allowable expenses for purposes of the ability to pay calculation are based on national standards for food, clothing, and out-of-pocket health care expenses and on local standards for housing, utilities, and transportation.

The IRS will also consider other factors, including the taxpayer’s age, health, education, and occupation, in determining the taxpayer’s RCP. Here the agency is trying to determine whether future income may increase. Therefore, a taxpayer may want to make a Freedom of Information Act request to see his or her collection administrative file to make sure the file contains accurate information.

If an Offer Is Rejected

If the IRS investigator decides to reject the offer, Sec. 7122(d)(1) requires the IRS to perform an independent administrative review of the rejection before notifying the taxpayer that the offer has been rejected. If the rejection is sustained on review, the IRS will notify the taxpayer by mail that the offer has been rejected. The taxpayer may request an Appeals hearing within 30 days of the date of the rejection letter. An appeal is the last chance to get the offer accepted. A taxpayer cannot contest a rejected offer in the courts; however, if the Appeals officer sustains the rejection of the offer, the taxpayer can submit another offer.

If an Offer Is Accepted

After an offer is accepted, a taxpayer must:

• Promptly pay any unpaid amounts due under the terms of the agreement;
• Notify the IRS if not able to comply with the agreed-upon terms; and
• Timely file all tax returns for the next five years and pay all taxes in full.

The IRS will not refund any overpayments shown on a return during this period and will instead apply them toward any outstanding assessment.

Failure to follow these requirements can result in a previously accepted offer being terminated and a taxpayer being required to pay the remaining balance in full.

This weekend while driving, I decided to listen to “The Dip” by Seth Godin. Godin defines life-paths as two primary curves: the Dip and the Cul-de-sac. The Cul-de-sac curve is a dead end where a person keeps putting energy, effort, time and money into project or goal that simply goes nowhere. Alternatively, the Dip can be described by this graph:

When a person first starts something, it’s usually really exciting along with a high reward. Additionally, other people are usually supportive and dishing out praise (for example, a person tells their extended family that they are attending law school). However, there is a potentially long period in which the effort does not result in a proportional reward. This book explains: (1) how to identify a dip; (2) how to get through it; and (3) how to recognize a dip from a dead end. Essentially, the moment a person realizes that a situation is a dead end, it is not only acceptable to quit, but mandatory and essential to success. Here are some of my favorite quotes from the book:

“The real success goes to those who obsess. The focus that leads you through the Dip to the other side is rewarded by a marketplace in search of the best in the world. A woodpecker can tap twenty times on a thousand trees and get nowhere, but stay busy. Or he can tap twenty-thousand times on one tree and get dinner.”

“It’s human nature to quit when it hurts. But it’s that reflex that creates scarcity. The challenge is simple: Quitting when you hit the Dip is a bad idea. If the journey you started was worth doing, then quitting when you hit the Dip just wastes the time you’ve already invested. Quit in the Dip often enough and you’ll find yourself becoming a serial quitter, starting many things but accomplishing little. Simple: If you can’t make it through the Dip, don’t start.”

“Persistent people are able to visualize the idea of light at the end of the tunnel when other’s can’t see it. At the same time, the smartest people are realistic about not imagining light when there isn’t any.”

“Never quite something with great long-term potential just because you can’t deal with the stress of the moment.”

The women in my family have always been master cooks making cooking somewhat intimidating for me. However, I have recently started to thoroughly enjoy it. One problem I run into a lot now is the fact that often I am only cooking for one or two people. Leftovers are great sometimes, but, truthfully, I end up wasting a lot of food and money. Lately, I have been researching cook books written exclusively for solo cooks. My favorite thus far is “Going Solo in The Kitchen.” Not only does this book provide great, unique recipes, it also gives strategies for food shopping and storing. One part I really enjoy about the book is that most of the recipes come with a variation and a new recipe if you happen to have leftovers. There is also a section that provides recipes for single servings of old-fashioned dishes such as meatloaf, brisket, or stuffed pork chops. Finally, the book gives great ideas for desserts. It is obviously impractical to make an entire pie or cake for one or two people so author provides other options. These are a few of the tips I found very useful:

1. Cooking in smaller pots is important when you are cooking smaller portions. This helps the flavor of anything you are braising.
2. The key to grocery shopping is planning ahead. Take the time to survey what you have, and what you’re in the mood for.
3. Don’t be unrealistic about the amount of produce you will eat. Solo shoppers tend to always buy too much produce to cook within a seven day time frame.

Hope you found these tips as useful as I did. This book really is a great buy for anyone cooking smaller portions.