PFD letter

[Devildawgjj]

The PFD letter on this web sit is a little over kill IMHO. I respectfully request some pointers on how this letter sould be worded. Should I just keep it simple? I'll pay you X amount in return you delete this TL. Should someone on there end sign it first, if they agree to the terms and mail it back? It's coming down to the wire for me. Ironically with cingular wireless. It is a CA that is going to get this letter since their the one's reporting it. Thanks for you help!!

[Debt Guy]

In my opinion, the best way to take a shot at this is to call and make your pitch on the phone. If they agree, ask them to fax you something in writing.

Now, in deference to about a hundred naysayers on the forum, there are many who are stuck on the mantra NEVER TALK TO A CA. Fine, if you are looking to not deal with the debt.

Writing letters is not an effective way to negotiate with an OC, a CA or a DB. Why? Because they are not organized to do business by mail. OK, you say "tough toenails -- that is not my problem". Well, it is your problem. You got to overcome the inertia of making an organization do something in a way they don't do well naturally. I hear it said often, "well, if they want my money, then they will do it by mail". Again, fine. Sometimes it works. Usually, it does not.

Now that I have all that out of the way, my standard thoughts on PFDs in general -- don't get your hopes unreasonably high:

Though a CA or JDB is not required to report, once they do report their actions relative to the tradeline are governed by federal/state laws and contractual agreements.

There is no law that explicitly prohibits a data furnisher from accepting cash to delete a tradeline (what is commonly referred to as a PFD). There is, however, an almost certainty that doing so would violate several federal laws. Let's say, for example, a CA offers to remove a tradeline in exchange for payment. If they accept payment before removing the tradeline they have violated both the CROA and, in my opinion, the FDCPA.

So, unless the data furnisher is willing to delete the tradeline first – they have a prospective problem on their hands.

That is only one of several reasons that the attorneys for the data furnisher strongly discourage PFDs. There is additionally the problem of the slippery slope of allegations and lawsuits for discrimination -- which would almost surely ensue as these organizations would likely have little consistency in the application of a PFD policy.

As a result, most data furnishers adopt a corporate policy to not delete tradelines. It is common that front-line drones will tell consumers that deleting a tradeline is illegal. Usually, they just don't know better -- or their supervisor told them to use that excuse in an effort to avoid arguing over the company policy to not delete.

There is another practical reason for data furnishers to not delete. The contract the DF has with the CRAs contains a clause that prohibits deletions. DFs who delete are at risk of losing their ability to report their negative items to the CRAs -- which generally would impact adversely their ability to recover bad debt.

Practically speaking, CAs and DBs would very much like to have a more liberal PFD policy. Their view is that such flexibility would be valuable as it would make it easier to collect debts and they could almost certainly force the consumer to pay a premium for a PFD.

The parties who have the most to lose with PFDs are the original creditors. People who extend credit have this odd mindset that they are entitled to know one's credit history in order to properly evaluate risk. Imagine that.

Since OCs are the ones who fork over the lion's share of the fees paid to the CRAs, it is easy to see why CRAs take a very firm posture opposed to PFDs and come down hard on data furnishers who operate fast and loose. The CRA is just trying to protect their revenue stream.

PFDs do happen. It is certainly appropriate to ask. They are not terribly common. Most PFDs come from smaller CAs and smaller OCs -- often medical or other non-credit related debts. It is very unusual to secure a PFD from a major corporation unless they have somehow messed up really badly and you have them backed into a buzzsaw.

[Devildawgjj]

Debt Guy, that is some very good insight that I had no understanding of. I'm going to read it again just to make sure I understand it more. Nobody said Marines were the smartest! Now I know your stand on PFD, what is your opinon for FOAD letters. Why bother, especially if the're past the SOL? I think in the next few months I will write one. Why or Why shouldn't I?

What encompasses a FOAD letter anyway?

Thanks for you respones!

[admin]

In my opinion, the best way to take a shot at this is to call and make your pitch on the phone. If they agree, ask them to fax you something in writing.

Yeah, right, they will fax you something in writing. I've yet to see that one. Unsolicted offers to settle for 60-80%, yes, but nothing via a fax or letter after you call them.

Now, in deference to about a hundred naysayers on the forum, there are many who are stuck on the mantra NEVER TALK TO A CA. Fine, if you are looking to not deal with the debt.

Writing letters is not an effective way to negotiate with an OC, a CA or a DB. Why? Because they are not organized to do business by mail. OK, you say "tough toenails -- that is not my problem". Well, it is your problem. You got to overcome the inertia of making an organization do something in a way they don't do well naturally. I hear it said often, "well, if they want my money, then they will do it by mail". Again, fine. Sometimes it works. Usually, it does not.

It's ok to to call to feel them out, but have your finger on the hang-up button because most of the time you will be screamed at.

It's also a good idea to start your conversation with "I am thinking of making a payment, where would I send it? What's your fax number? Who am I speaking to? Can I get your direct line and extension?" Then you can launch into your offer.

Now that I have all that out of the way, my standard thoughts on PFDs in general -- don't get your hopes unreasonably high:

Though a CA or JDB is not required to report, once they do report their actions relative to the tradeline are governed by federal/state laws and contractual agreements.

There is no law that explicitly prohibits a data furnisher from accepting cash to delete a tradeline (what is commonly referred to as a PFD). There is, however, an almost certainty that doing so would violate several federal laws. Let's say, for example, a CA offers to remove a tradeline in exchange for payment. If they accept payment before removing the tradeline they have violated both the CROA and, in my opinion, the FDCPA.

So, unless the data furnisher is willing to delete the tradeline first – they have a prospective problem on their hands.

In my experience, the debt collector wants the cash and that's it. Reporting on your credit report is a way to make you pay. Consider the fact that the first time the debt is purchased, it was purchased at 7 cents on the dollar (the more often it goes from place to place, the less they paid). Put your offer in the form of a business deal. By the way, these numbers are well documented, as far as what COllection agencies pay.

For example: if your debt is $10K:

$10,000 x .07 = $700.

You offer them $2500.

That's a profit of: $2500 - $700 = $1800.

I've had clients have a lot of success with this. You just have to sound like you know what you are talking about.

That is only one of several reasons that the attorneys for the data furnisher strongly discourage PFDs. There is additionally the problem of the slippery slope of allegations and lawsuits for discrimination -- which would almost surely ensue as these organizations would likely have little consistency in the application of a PFD policy.

As a result, most data furnishers adopt a corporate policy to not delete tradelines. It is common that front-line drones will tell consumers that deleting a tradeline is illegal. Usually, they just don't know better -- or their supervisor told them to use that excuse in an effort to avoid arguing over the company policy to not delete.

There is another practical reason for data furnishers to not delete. The contract the DF has with the CRAs contains a clause that prohibits deletions. DFs who delete are at risk of losing their ability to report their negative items to the CRAs -- which generally would impact adversely their ability to recover bad debt.

It's pretty easy for a collection agency to delete. As I've said over and over, they have no paper work to back up their reporting on your credit report and they know this. If you took them to court for furnishing negative information without having any proof under the FCRA, they would lose. IT's happened over and over.

Practically speaking, CAs and DBs would very much like to have a more liberal PFD policy. Their view is that such flexibility would be valuable as it would make it easier to collect debts and they could almost certainly force the consumer to pay a premium for a PFD.

The parties who have the most to lose with PFDs are the original creditors. People who extend credit have this odd mindset that they are entitled to know one's credit history in order to properly evaluate risk. Imagine that.

They actually make more money than the collection agencies via the tax breaks for bad debts (it's about a 40% break).

Since OCs are the ones who fork over the lion's share of the fees paid to the CRAs, it is easy to see why CRAs take a very firm posture opposed to PFDs and come down hard on data furnishers who operate fast and loose. The CRA is just trying to protect their revenue stream.

If you don't have the documentation to support your negative reporting on consumers to the CRAs (and hardly any of them do), then the collection agencies shouldn't be reporting in the first place. In my opinion, for a CA to report a collection is being more fast and loose than deleting one.

PFDs do happen. They are not terribly common.

That's because consumers don't know their rights.

[admin]

Debt Guy, that is some very good insight that I had no understanding of. I'm going to read it again just to make sure I understand it more. Nobody said Marines were the smartest! Now I know your stand on PFD, what is your opinon for FOAD letters. Why bother, especially if the're past the SOL? I think in the next few months I will write one. Why or Why shouldn't I?

What encompasses a FOAD letter anyway?

Thanks for you respones!

My experience is totally different from his. I suggest you try PFD before dismissing it out of hand. It's worked for my clients and I'm not even the one negotiating, so really, anyone can do it.

[Amerikaner83]

I agree with admin.

I have personally done several PFDs IN WRITING. And solely in writing.

I have also had one agency tell me that it was ILLEGAL. I ended up sending them the paperwork of my lawsuit against them for that false statement (and some other violation of my state collection laws) and they deleted.

A PFD is a tool. With any tool, sometimes it may work sometimes it may not. But that shouldn't stop one from trying, no?

[Devildawgjj]

My experience is totally different from his. I suggest you try PFD before dismissing it out of hand. It's worked for my clients and I'm not even the one negotiating, so really, anyone can do it.

I most certainly will! I knew there was 2 sides to this, I was just waiting for someone to step up. Thanks admin! I read a lot of your posts and they are extreamly helpful.

I'll see if I can conjure up a PFD letter and see what you think about it......

[Debt Guy]

OP

Just so we know who gave you accurate information here, would you please post back the results. I can predict what your results will be. If I am wrong, then I will hang my head in shame and apologize. If I am right, then I will feel vindicated in my defense.

admin & AK

you are entitled to your opinion -- wrong as it may be -- lets get some real facts here instead of perpetuating old worn out opinions and unsubstantiated observations. I swear that I am going to start making a list -- there are more posts on the forum about posters being turned down for PFD that ones who say they got one done. And, they tend to fit the criteria I described -- smaller CAs and OCs and mostly smaller non credit related obligations. I challenge you to show me where AMEX or Citi or Chase or any major does PFDs.

It's ok to to call to feel them out, but have your finger on the hang-up button because most of the time you will be screamed at.

You are exaggerating. Besides, do you really think a Marine has never before been screamed at?

They actually make more money than the collection agencies via the tax breaks for bad debts (it's about a 40% break).

This is another of those myths I keep beating down.

Here, you clearly have no clue what you are talking about. First, there is not such thing as "a bad debt deduction" the way you use the term unless you think that not paying taxes on the money you lose is somehow a money maker. They pay taxes on their profit or loss on their basis in the pool. If they lose money on the pool, then they get to deduct that loss against other income.

Unless, of course, you somehow think that losing money is a tax racket.

Technically, there is a what might loosely be called a bad debt deduction but that is a misnomer and it applies to an OC. Banks are required by the federal regulators to establish reserves for losses. For example, if I have a pool of $5 jillion of a certain type of loan and the industry historical loss rate is 6%, then the bank is required to establish a special loss reserve of 6% of $5 jillion. The bank does not pay taxes on the money they put into that reserve. As actual losses occur, the loss is charged to the reserve with no impact (positive or negative) on earnings or taxes. Please note that not every type of bank loan has this sort of "general reserve" and some types of loans are subject to "specific reserves". For example, the bank has a loan to FNMA and since FNMA is effectively in bankruptcy, the regulators require that loan to be "written down" to zero. The write down is accomplished by establishing a "specific reserve" in the amount of the loan.

Regardless of the type of reserve, in the end, it is a zero sum game. It is not a tax break. You just don't pay taxes on money that got flushed down the toilet. How does that not make logical sense?

Federal regulators and the SEC insist on this type of reserve for loss and the associated accounting in an effort to assure transparency in reporting to the public and to stockholders.

Since a creditor cannot make money on this illusory "tax break", your statement is confused and illogical. It is mathematically impossible to come out ahead. If I lend you $100 and you don't pay me back, I get to deduct that loss against profits I made on something else.

Lets take a different example, you lend me $100 and I don't pay you back. Beyond the fact that you feel cheated, explain to me exactly how that is an advantage to you. It isn't. OK, you deduct the loss from your taxes. Are you ahead of the game? No, because the loss only reduces your taxes by the marginal tax rate. Do you know feel like you "made more money via the tax breaks"? Huh? I don't think so.

Also, I need to correct another misstatement

They actually make more money than the collection agencies via the tax breaks for bad debts

Poor sentence construction aside and the fact that I cannot tell who "they" is in your comparative, please be reminded of the difference between a "collection agency" and a "creditor".

Collection agencies take no risk in the debt -- they earn a contingency fee as a function of collections. Collection agencies have absolutely nothing to do with "tax breaks for bad debts". They don't own the darn things. How on earth could they take a loss on the debt and why do you think it could possibly affect their taxes?

It's pretty easy for a collection agency to delete. As I've said over and over, they have no paper work to back up their reporting on your credit report and they know this. If you took them to court for furnishing negative information without having any proof under the FCRA, they would lose. IT's happened over and over.

This statement too is illogical. Whether or not a collection agency deletes has nothing to do with "paperwork". Remember that a collection agency is not the owner of the debt and is only reporting what they are given by the creditor. Besides, I've never seen anywhere in the FCRA where is says the data furnisher has to have paperwork. The FCRA only says the information reported must be accurate. If, you think the data is inaccurate, then litigate away. But, if the information is accurate, all the bluster and litigating in the world is not going to require the data furnisher to delete. They might delete for a different reason, but not because they are required to.

Talk is cheap. Litigating is hard. I'm never going to be one to tell someone to not stand up for their rights. I will knock down that kind of talk as not practical or pragmatic. I want the OP to actually stop and think for a minute about risk and reward. Is it worth the effort and cost to right this wrong? How difficult is it to prove that there was a violation of the Act? Does the OP have sufficient talent, skills, time and motivation to carry the case into federal court, where darn near everything is stacked against a novice? If not, then let it go.

Some battles are simply not worth the fight. A wise person knows the difference between prudence and folly.

Finally, a thought for AK -- I have also had one agency tell me that it was ILLEGAL.

You are aware, of course, that it is illegal for a data furnisher to accept payment prior to deleting the tradeline? In that sense, what you were told was not inaccurate although it may not have been explained that way.

We both know that businesses make business decisions. I have many a time bitten my tongue and did not stand my ground for what was right; and settled a nuisance lawsuit for reasons of economic efficiency. So, while you may have gotten what you wanted, me thinks it was for the wrong reason. Somehow, I am guessing that does not trouble your conscience much.

I've not seen you on the board lately. Things OK?

[admin]

Debt Guy,

You've yet to reveal the source of your information. My information comes from direct dealings with real cases. Where does yours come from? I would really be interested.

BTW, saying things like "You obviously don't know what you're talking about" is if not over the line, it's on the line of personal attacks. Watch it.

[Robert Nashville/Savannah]

…..Besides, do you really think a Marine has never before been screamed at?

That’s a good one! I’ll tell you, Navy DI’s can yell with the best of them as well (so can Captains and XOs).

Humor aside, no consumer should ever put up with abuse on the telephone.

…. They actually make more money than the collection agencies via the tax breaks for bad debts (it's about a 40% break).

This is an issue near and dear to my heart…I truly do not understand where people got the impression that any sort of “tax break” exists from loosing money.

I'm reasonably certain that those who truly believe that creditors in any way "make money" when a debt isn't paid through some offset of taxes has probably never read the code and never done a set of books for a business before - the only thing I can conclude is that the belief is embraced simply because it can be used as a rationalization for not paying a debt.

Companies (be they retail stores, banks, or debt buyers) pay taxes on their profits and don’t pay taxes on their loses…so that they are “made whole”; it’s probably the most “fair” concept in our tax code.

[JustaTexan]

Just so we know who gave you accurate information here, would you please post back the results. I can predict what your results will be. If I am wrong, then I will hang my head in shame and apologize. If I am right, then I will feel vindicated in my defense.

I don't think advising somebody to atleast try a PFD is an issue of right and wrong. It an issue of utlizing all of your options and seeing which ones work with each particular company you might be having to deal with.

If the PFD works, (more than often it won't but I would still try it everytime), and if it doesn't work, nobody was "right or wrong" on that issue. It's not a competition, we're trying to help people here and guide them while they utilize all the tools available to them.

[admin]

This is an issue near and dear to my heart…I truly do not understand where people got the impression that any sort of “tax break” exists from loosing money.

I've gotten that impression because I was able to write off 40% of some bad debt due to some joker who did not pay their software development bills.

The net effect:

Without the profit-loss write off, tax bill last year would have been a few hundred dollars higher. Since this is actual money the company did not have to pay to the feds, it was a net gain in cash any way you look at it.

However, if I made no profit, I would not have gained from the profit-and-loss. On the other hand, since my company is an S-corp and losses get deducted right off of my personal taxes, it still would have been a net gain of cash to me personally (a couple of hundred dollars).

I'm reasonably certain that those who truly believe that creditors in any way "make money" when a debt isn't paid through some offset of taxes has probably never read the code and never done a set of books for a business before - the only thing I can conclude is that the belief is embraced simply because it can be used as a rationalization for not paying a debt.

Companies (be they retail stores, banks, or debt buyers) pay taxes on their profits and don’t pay taxes on their loses…so that they are “made whole”; it’s probably the most “fair” concept in our tax code.

See above.

[Robert Nashville/Savannah]

Every business, regardless of what method of accounting it uses (most businesses have to use the accrual method by law); only pays income taxes on its NIBT (Net Income Before Taxes).

With a cash method of accounting it’s more straightforward but in an accrual based system, a business recognizes revenue (and its NIBT) at the point that profit can be reasonably “known” and “measured” (if it’s a retail business, that would generally be the moment something is sold to a customer, for example).

So, if ABC Corporation sells you a TV set for $1,000 TV, and, for the sake of the example, they have tax deductible expenses of $800 (wholesale cost of the TV, advertising, warehousing, transportation, etc.); they have a recognizable NIBT on that item of $200 on which they pay income taxes at the end of their fiscal year - notice I haven’t said anything about their having actually been paid for the item yet.

If you paid cash for the TV, and assuming you don’t return it, they pay income taxes on the $200 and it’s a done deal.

However, if ABC Company extended you store credit (to keep it simple, we’ll assume at 0% interest), they still must report the NIBT of $200 at the point they file that year’s returns and they pay income taxes on that $200 profit even if you haven’t paid them a dime yet.

This is where I think most people get confused...when things extend beyond one fiscal year.

Let’s say we are now in the following fiscal year after the TV set was sold and you’ve defaulted on the credit extended and haven’t paid ABC for the TV - the SEC and various/other sundry agencies require ABC to “write off the debt”…they essentially reverse the accounting entries made when the TV was sold.

At this point, they not only don’t have the $200 profit they’ve already paid income taxes on, but they have an even larger loss (all the expenses expended up to the point they sold the TV, namely, the $800.

The next time they file their corporate income tax, they have a deduction against their income of $1,000 (the $800 plus the $200) which means they are now “even” as far as income taxes go.

That’s not a “break” on their taxes – since virtually every business has accounts that wind up never being paid, were it not for this mechanism, businesses would be paying income taxes on profits they didn’t make.

In your specific case (I assume you use the cash method)...you/your company expended time/effort/skills (which have a $$$ value) in anticipation of getting paid for those expenditures plus a bit more (your profit)...when you weren't paid, you had the legal right to "deduct" the value of what you had expended so that what you did eventually pay taxes on, was a fair representation of your true profits!

*This is, obviously, a rather simplified example and there are lots of intricate details that can come into play but while those things can make the concept more difficult to see, they don’t change the basic concept that a business can never do better than break-even on/be made whole when it comes to the taxes they pay.

[admin]

The next time they file their corporate income tax, they have a deduction against their income of $1,000 (the $800 plus the $200) which means they are now “even” as far as income taxes go.

That’s not a “break” on their taxes – since virtually every business has accounts that wind up never being paid, were it not for this mechanism, businesses would be paying income taxes on profits they didn’t make.

Yes, I did the taxes myself. And yes, cash method. Very good!

This is way off the original topic, but why isn't the write-off against their profits still a net gain vs. not being able to write off anything. Sure, they don't get the profit from the TV, but they get something back.

[Robert Nashville/Savannah]

....

Well, it’s a good thing for businesses that they do get to deduct bad debts from their NIBT but it’s not a “gain”.

In the business world, “gain” would usually imply something “over and above”; this mechanism just allows them to “get back” what they’ve already expended so they really haven’t gained anything; they've just broke even on taxes.

[admin]

Yeah, it's a gain over no tax write off.

So if you fail to collect and this tax law did not exist, you'd be out more cash/profit.

So if Joe Schmoe owes you $10K and you accept $1000 as payment in full and the profit and loss tax write off is 40% and average US company tax rate is 33% then you write off ($4000 * .33 = $1333) you would be ahead $300 than if you took a $1000 settlement.

Is my math all messed up?

[Robert Nashville/Savannah]

....

It’s not that your math is messed up but you are forgetting some components – you aren’t ahead because you still have a very real loss to consider.

Somewhere along the line (a month before or a year or two years before you loaned it out), you had to have “made” that $10,000 (I’m assuming you didn’t make it in your basement).

So, let’s say that in Tax year 2007; you had income of $100,000 on which you paid taxes of $33,000 (at 33%) leaving you $67,000 to do with as you please.

You decide to keep $57,000 but you loan out $10,000 to Joe Schmoe (and because he’s a good friend, you don’t charge him interest).

You hope he will pay you back but he doesn’t; let’s say he simply can’t for some reason. You now have a $10,000 loss PLUS you have a “loss” by virtue of what you paid in income tax when you initially made the $10,000 (or $3,300); at that moment you have a total loss of $13,300.

So, the next tax year when it’s time to file, you deduct the $10,000 loss from whatever income you do have…let’s say you make $100,000 again in income that year so with the $10,000 loss deducted, you only pay income tax on $90,000 and at 33%, that’s $29,700.

Keep in mind that without the “loss” you would again have paid $33,000 in income taxes but since you’ve only had to pay in $29,700 you’ve now been “made whole” on your taxes ($33,000 you would have paid LESS the $29.700 you did pay = $3,300).

In other words, you paid tax on the $10,000 in one year and got the tax “back” in another so you are now even as far as taxes are concerned.

But you are still out the $10,000.

Now, if Joe does pays you $1,000 as settlement in full, he has “income” of $9,000 (the amount of the loan he didn’t pay back) and you have a loss of $9,000 (instead of $10,000).

So, when it’s time to pay your taxes that year, instead of deducting $10,000 from your $100,000 income, you deduct the $9,000 loss and you pay tax on $91,000.

Any way you slice it, you will break even on taxes but you still have the “loss” of the value of whatever you loaned out.

[LUEser]

Excuse the thread jacking,

How does this apply in the event of a JDB?

They pay much less than the actual amount of the debt, yet act as the creditor. They forgive the debt. Let's say it was 1000.00 dollars.

They paid maybe 70 for it. Do they, at the issuance of a 1099, get to claim the tax break for the full 1000, or for the 70 they paid for it?

Seems to me they're getting a break here, and it's net gain. At 33% they're raking in 333.33. So their actual "Tax Profit" would be construed as 263.

Unless, I'm totally off base here, look like we have some kind of tax fraud going on.

And another question, Does the OC get to take a tax break on the debt as well for selling it well under the actual amount? Or do they just cut their losses?

[Robert Nashville/Savannah]

....

No one gets a “tax break” for issuing a 1099c…it’s just a form the IRS requires the issuer to file so that the IRS knows what happened it has no impact one way or another on the issuer but it may have an impact on the recipient.

When an original creditor sells a bad debt, whatever income they receive on it will be part of their revenue for that tax year and they will pay taxes on that “income” as they would any other income. So; if the OC has a bad debt they are holding which was originally worth $1,000 and they sell it for $70; then they’ll pay income tax on the $70 of income.

A debt buyer is no different than the original creditor in this regard except their “basis” in the debt (which is an asset as far as their books are concerned) is whatever they paid for it.

If they hold a debt with a face value of $1,000 but they paid $70.00 for it, their profit is anything over and above their cost (which would include the “expense” of collecting)…if they never collect anything on the paper, then their “loss” is the $70 they paid for the debt plus whatever expense they had in trying to collect it.

[Debt Guy]

You've yet to reveal the source of your information. My information comes from direct dealings with real cases. Where does yours come from? I would really be interested.

A long career as a banker and managing various bank loan origination and collection functions. Plus a short period of time working in the finance division of a national debt buyer. Plus an extended career as a consultant and doing operations performance audits for banks and some collection agencies. Plus a number of contacts in various industries to whom I can address a question if I don't already know the answer. Plus direct dealings with real cases.

BTW, saying things like "You obviously don't know what you're talking about" is if not over the line, it's on the line of personal attacks. Watch it.

Consider myself watched. You have a very hard time admitting when you are wrong -- as in the ongoing dialogue between yourself and Robert over "tax breaks from losing money". With respect, the fact is that you do not know what you are talking about -- literally you are opining on a matter on which you apparently have no practical or in-depth knowledge. There is not any other way to describe the situation. It is not sin to be wrong -- heck, I've been wrong about a jillion times. But, I do try to keep an open mind on matters where I don't have hands on experience. Trust me, I learn new things every day.

I speak directly. I do not wish to offend anyone. If I did, it would be abundantly clear. I learned offensiveness from a Navy Senior Chief. I know how to get the job done.

For everyone, let me re-emphasize the basic principle -- there is no way to make money by losing money. Yes, admin, your math is correct that the amount of loss is marginally reduced by the fact that you did not pay taxes on the loss. I don't see how you can consider that a "break". No business, even yours, is not allowed to deduct losses.

The basic rule of that you pay taxes on the net income. Net income is gross income less expenses less losses (losses can be credit or theft or, in some cases, casualty). Personal taxes basically parallel that same notion with some differences that relate to certain income that is subject to deductions to account for various things (like kids or mortgage interest) and sometimes restrictions on how certain losses are treated (typically casualty losses).

Tax policy is admittedly overly complex. But, it is designed to do two things -- one is generate revenue for the government and the second is to discourage certain activity and to encourage other activity. Both business and personal taxes have those two driver characteristics.

If government wants to discourage home ownership, they reduce or restrict the mortgage interest deduction. If government wants to encourage banks to be more conservative with the loans they make, they might eliminate the provision for loan loss reserves and thus require taxes to be paid on loan losses. Name me any corporate or personal behavior you want to change and I'll show you how to use tax policy to get there.

But, no matter what tax policy is in place, you cannot make money by losing money. At best, you can only lose less money. To call that a tax break is misleading and, I maintain, not accurate.

[Robert Nashville/Savannah]

Perhaps the “problem” is the use of the term “tax break”…the terminology itself implies that somebody is getting something for doing nothing…something undeserved except for the largess of the government.

When the Federal government gives a taxpayer an Earned Income Tax Credit (which is simply a form of welfare by another name), that might loosly be be called a “tax break”.

However, when it comes to the income taxes a business pays on its net income, there is no “break”; you simply pay tax on your net income which takes into account revenue and expenses and losses.

[Devildawgjj]

It's ok to to call to feel them out, but have your finger on the hang-up button because most of the time you will be screamed at.

You are exaggerating. Besides, do you really think a Marine has never before been screamed at?

Hey, the last time I checked I did all the screaming::

I will be sure to post my results when they investigate my dispute.

Oh, how does that PFD letter go again?

[bigswanging23]

With respect, the fact is that you do not know what you are talking about -- literally you are opining on a matter on which you apparently have no practical or in-depth knowledge. There is not any other way to describe the situation.

This is kind of like when someone starts a sentence with "I'm not trying to be rude", you know you're about to hear something incredibly rude.

Geez.

[james442]

Good info on this Admin and Debt Guy,

You can also do a similar type of negotitation which I had success where you can tell them you will pay BUT they will no longer report or resell to another JDB.then dispute the item later and GET THIS IN WRITING!!i If verified,you may have a breach of contract.