Max Gateway

Manuel Davis Jr. asked:


As a result of TIPRA or the Tax Increase Prevention and Reconciliation Act passed in 2005, the IRS will accept three payment methods or plans with an Offer in Compromise (OIC).

1. Lump Sum Offer (cash) - with this option the payment must be paid in no more than 5 payments if acceptance letter is mailed. When submitting form 656 (form for offer in compromise), 20% of the total amount due must be enclosed. If installments are to final in less than 5 months, the taxpayer should offer his total realizable assets (amount that can be offered if assets were sold in 90 days or less, minus what is owed to creditors like banks) plus the the total that can received over 48 monthly payments. If installments are to final in more than 5 months, the taxpayer should offer his total realizable assets (amount that can be offered if assets were sold within 90 days or less minus what is owed to creditors like banks) plus the total that can received over 60 monthly payments.

2. Short Term Periodic Payment Offer - this is a payment option where the taxpayer submits Form 656 (OIC letter offer) with the first payment and continuously makes payments during the investigation. The total offer amount must be collected with 24 months and any failure to make payments during the offer letter is being reviewed will translate to the offer being pulled. Again, the offer must be equivalent to the taxpayer’s total realizable assets (explained in paragraph above) plus what could be payed in 60 months.

3. Deferred Periodic Payment Offer - Much like the Short Term Periodic Payment option, the taxpayer must submit the first payment along with Form 656 and continuously make payments during the review. This is an offer where the amount is to be paid over the remaining tax statutory period. Again, the offer must be equivalent to the taxpayer’s total realizable assets (explained in paragraph above) plus what could be payed on a monthly basis till the end of the statutory period. Once again, any failure to make payments during the offer letter is being reviewed will translate to the offer being pulled.

It is important when submitting Form 656 that the payment plan selected is noted (one of the three above). There is a $150 application fee which is applied to your assessed tax. All payments submitted with the From 656 are non-refundable non matter what — this means even if the IRS does not accept offer, terminates the offer, etc but the payment(s) is applied to your total tax debt balance.

Ray La Foy asked:


Paying bills online either using computer payment services, eChecks or direct bank transfers can seem a little awkward at first, but as long as security is in place, this mode of payment can be the best for both businesses and customers. The advantages to paying through online services are many and the ease of most payment options is incredible.

Online banking and bill payment options have some of their own terms new users - whether businesses or private individuals - should be familiar with however. Typical lingo for the online payment world includes such things as:

* Encryption: This refers to security measures companies take to make sure others can’t get your information. If you don’t see a security encryption statement or aren’t told by the program that you’re entering a secured area, steer clear. This is especially so if you’re typing in bank account numbers, Social Security numbers and the such.

* An eCheck: This form of payment involves a third-party transfer of money from your checking account to another’s. It’s considered one of the more safe methods for online payments.

* Direct online payments. Just about every business that takes routine payments now offers some sort of computerized, online payment service. From water and electric bills to credit card payments, it can all be done online. This saves time, hassle and the money involved in a stamp. For the businesses that accept online payments, this system provides virtually instant credits of money since they’re basically handled like wire transfers and it also give customers and clients another option for paying on time even right up until the deadline time.

* Confirmation numbers. Just like telephone payments, online payments often come with their own confirmation numbers to help a customer track their payment if something happens. These are important to write down.

The reasons for paying online through direct payments, echecks or other services are many, and include:

* Sometimes instant payment credit. Since computers can update information very quickly, payments are often recognized as soon as they’re entered.

* Ease of use. There’s no need for extra paperwork with the Internet can get it done right way.

* Coordination with online banking. If payments are made using an online banking system, keeping track of them in conjunction with your bank account is even easier. Balances and totals automatically update as you pay your bills.

Everyone from private individuals to businesses themselves are taking advantage of the options offered by online bill payment methods. One of the quickest and most secure ways to both get and send money, online banking options are taking the hassles out of making payments. There’s no need to balance a checkbook when a bank’s program does that for you as you go along paying your bills and there’s no reason to worry about a late electric payment when it can be made and credited online right away any time of the day or night.

Tristan Hunt asked:


One of the most common things I hear when a prospective client contacts us for a mortgage refinance is “I just missed a mortgage payment and I want to refinance before it’s too late”. When I ask them about their credit, most of them reply “Oh I pay everything on time, I just got behind this one month on the mortgage”.

It breaks my heart to tell them that in many cases, it already is too late. The reason is simple if you really think about it: If your home is your biggest investment, your greatest potential asset and your largest current liability, there is nothing more important than showing that you are able to make the payment on it every month. If you are in a cash crunch, you’re better off missing or underpaying almost any other payment, such as a credit card bill, even your utility bill, instead of missing or even delaying your mortgage payment, because missing one mortgage payment can cost you tens of thousands of dollars over the years.

When you miss a mortgage payment, your credit score may not go down dramatically. But your mortgage credit quality will take a serious beating, and you’ll carry it around for years. When you start out with a mortgage, regardless of what your FICO credit score is, you are rated an “A”, meaning you make your mortgage payments on time. If you miss a payment, and even if you’re just late enough to qualify as 30 days late, the lateness is recorded and you will become an “A-” or a “B”. Just one mortgage lateness can keep you out of the refinance market for up to two years by automatically locking you out of the lowest payment programs such as Option ARMs or low-rate fixed mortgages, and you can forget about stated income programs, you will now have to prove where every penny comes from and you’ll need more of them too. If it sounds a bit like high school, it is, but this time its for keeps. Keep missing or delaying payments, and you’ll quickly see your mortgage quality decline to a “C” or “D”, which could prevent you from refinancing entirely by eliminating your eligibility from even standard rate programs. I have seen customers who started out at 6% wind up at 10% or more solely because they chose making payments on cars or credit cards over making their mortgage payment on time.

This hurts the most when you refinance or are ready to buy a new house, because you are usually borrowing more money than you were previously, either to pay off bills or make home improvements, or because you’re getting a bigger house. So not only are you moving to a higher balance, but your now derogatory mortgage credit will force you into a high rate. If you need the cash to pay off bills and improve your credit urgently, or to purchase a home in a new area because you are relocating for work, you can wind up in a horrible Catch 22, very often disqualified for financing entirely, or with financing so unaffordable that you would rather not.

So what can you do about this? If you do better with automatic payments, sign up for direct debit payment with your lender, or arrange for your bank to automatically pay your mortgage every month on a specific date which far enough ahead of the due dates for your other bills that you won’t be tempted to pay something else. The day after payday is a great day to do it. And the date should be far enough ahead of your due date that the bill is paid and posted on time. It might hurt that first month, but it will even out once you get used to the new schedule.

And if you are even thinking that you might miss a mortgage payment, call up a loan officer, and not one who works for your current lender, and get refinanced today. Not only will this put a little extra cash in your pocket and help you pay off your other bills, but it will usually allow you to go a few extra weeks without making another payment out of pocket. In fact, for qualified borrowers, we even have Zero Payment & Zero Interest for 90 Day loans which are perfect for people who are at risk of missing their next payment. Because there are no payments for up to 90 days, this is a very popular product amongst our customers. Option ARMs and Fixed-Rate Option ARMs (Hybrids) are also excellent products for people who are having trouble making ends meet temporarily, but expect to get back on their feet within a few month sor a few years, respectively. Loans generally take 15 days to close, so you really need to think ahead a little bit, which is hard for all of us. But instead of freezing up, or scrambling around looking for money, call up an experienced professional and get out of that jam before you get into trouble. You’re better off dealing with the issue in the present instead of regretting the past. And no matter what, make sure you satisfy your mortgage payment obligation. Everything else on your credit report can be repaired, negotiated, but not your mortgage lates. Don’t wind up in a situation like many of my callers are in, ready to dance but too late to the party, plan ahead and as always, protect your financial future today!