S.1187: Mortgage Forgiveness Tax Relief Act and Very Big Deal | AFR Sign On Letter Tax Relief Act

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S.1187: Mortgage Forgiveness Tax Relief Act and Very Big Deal | AFR Sign On Letter Tax Relief Act

S.1187: Mortgage Forgiveness Tax Relief Act and Very Big Deal | AFR Sign On Letter Tax Relief Act

Hi Damian

I’ve attached a pretty powerful letter that was sent to Congress last week by Americans for Financial Reform on behalf of just about everybody in the country, according to the multiple signature pages. It urges quick action by legislators to extend and expand the mortgage debt tax relief provisions that expired at 12/31/2013. I hope you can post it.

Also, in case you think your readers might want to weigh in themselves, here’s a link to a website where they can track bills and quickly send letters of support or opposition directly to their elected representatives.
http://www.opencongress.org/bill/s1187-113/show

Surfing this site and reading the personalized letters suggests there was deliberate delay by various lenders in processing all sorts of pipeline deals before year-end (short sales, mods, refis). Therefore it looks like a lot of borrowers got stuck in a very bad tax place for 2014 through no fault of their own.

Just FYI, right now, this mortgage debt relief provision is also included in the more comprehensive “tax extenders” bill, S 1859 (also tabled), with about 50 other tax provisions that expired at 12/31/2013. Those are the provisions that Ron Wyden wants to work on with Orrin Hatch (Senate Finance Committee) this “spring.” But even if they can get the House to go along (Paul Ryan et al), it’s not clear which of the 50+ “extenders” will survive in a version that might become law.

To make those decisions, legislators will be paying close attention to the letters they get from constituents and funders, starting right about now. That’s because everything on the Hill will pretty much grind to a halt mid-summer until after the mid-term elections. After that, what will happen is anyone’s guess.

By the way, there’s been a lot of misinformation about who will get hit with big tax bills if the relief doesn’t get extended for 2014. Folks who truly have nothing will likely NOT be in trouble because they are “insolvent” for both IRS and Chapter 7 Br purposes.

But here’s the danger – Anyone who is still hanging on is probably not destitute. These folks probably have wages and/or assets that are vulnerable at some level to either the IRS or the Bankruptcy Court. So there may be no way out for them unless Congress acts.

For example, older workers who have qualified retirement plan savings (IRAs 401s 457s, etc) could lose them because they are not off-limits to the IRS the same way as they would be for bankruptcy. They might even have to pay big early withdrawal penalties if those savings have to be used to pay the IRS.

The attached letter explains how younger families who took cash-out refis during the boom are also vulnerable.

Down Load PDF of This Case

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