Introduction

There is a clear-cut difference between tax avoidance and tax evasion. One is legally acceptable and the other is an offense. Unfortunately however many consultants even in this country do not understand the difference between tax avoidance and tax evasion. Most of the planning aspects that have been suggested by these consultants often fall into the category of tax evasion (which is illegal) and so tends to put clients into a risky situation and also diminish the value of tax planning.

This may be one of the prime reasons where clients have lost faith in tax planning consultants as most of them have often suggested dubious systems which are clearly under the category of tax evasion.

In this chapter I provide some examples and case studies (including legal cases) of how tax evasion (often suggested by consultants purporting to be specialists in tax planning) is undertaken not only in this country but in many parts of the world. It is true that many people do not like to pay their hard-earned money to the government. However doing this in an illegal manner such as by tax evasion is not the answer. Good tax planning involves tax avoidance or the reduction of the tax incidence. If this is done properly it can save substantial amounts of money in a legally acceptable way. This chapter also highlights some practical examples and case studies (including legal) of tax avoidance.

Why Governments Need Your Taxes (Basic Economic Arguments)

Income tax the biggest source of government funds today in most countries is a comparatively recent invention, probably because the notion of annual income is itself a modern concept. Governments preferred to tax things that were easy to measure and on which it was thus easy to calculate the liability. This is why early taxes concentrated on tangible items such as land and property, physical goods, commodities and ships, as well as things such as the number of windows or fireplaces in a building. In the 20th century, particularly the second half, governments around the world took a growing share of their country’s national income in tax, mainly to pay for increasingly more expensive defense efforts and for a modern welfare state. Indirect tax on consumption, such as value-added tax, has become increasingly important as direct taxation on income and wealth has become increasingly unpopular. But big differences among countries remain. One is the overall level of tax. For example, in United States tax revenue amounts to around one-third of its GDP (gross domestic product), whereas in Sweden it is closer to half.

Others are the preferred methods of collecting it (direct versus indirect), the rates at which it is levied and the definition of the tax base to which these rates are applied. Countries have different attitudes to progressive and regressive taxation. There are also big differences in the way responsibility for taxation is divided among different levels of government. Arguably according to the discipline of economics any tax is a bad tax. But public goods and other government activities have to be paid for somehow, and economists often have strong views on which methods of taxation are more or less efficient. Most economists agree that the best tax is one that has as little impact as possible on people’s decisions about whether to undertake a productive economic activity. High rates of tax on labour may discourage people from working, and so result in lower tax revenue than there would be if the tax rate were lower, an idea captured in the Laffer curve in economics theory.

Certainly, the marginal rate of tax may have a bigger effect on incentives than the overall tax burden. Land tax is regarded as the most efficient by some economists and tax on expenditure by others, as it does all the taking after the wealth creation is done. Some economists favor a neutral tax system that does not influence the sorts of economic activities that take place. Others favor using tax, and tax breaks, to guide economic activity in ways they favor, such as to minimize pollution and to increase the attractiveness of employing people rather than capital. Some economists argue that the tax system should be characterized by both horizontal equity and vertical equity, because this is fair, and because when the tax system is fair people may find it harder to justify tax evasion or avoidance.

However, who ultimately pays (the tax incidence) may be different from who is initially charged, if that person can pass it on, say by adding the tax to the price he charges for his output. Taxes on companies, for example, are always paid in the end by humans, be they workers, customers or shareholders. You should note that taxation and its role in economics is a very wide subject and this book does not address the issues of taxation and economics but rather tax planning to improve your economic position. However if you are interested in understanding the role of taxation in economics you should consult a good book on economics which often talks about the impact of different types of taxation on the economic activities of a nation of society.

Tax Avoidance and Evasion

Tax avoidance can be summed as doing everything possible within the law to reduce your tax bill. Learned Hand, an American judge, once said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible as nobody owes any public duty to pay more than the law demands. On the other hand tax evasion can be defined as paying less tax than you are legally obliged to. There may be a thin line between the two, but as Denis Healey, a former British chancellor, once put it, “The difference between tax avoidance and tax evasion is the thickness of a prison wall.” The courts recognize the fact that no taxpayer is obliged to arrange his/her affairs so as to maximize the tax the government receives. Individuals and businesses are entitled to take all lawful steps to minimize their taxes.

A taxpayer may lawfully arrange her affairs to minimize taxes by such steps as deferring income from one year to the next. It is lawful to take all available tax deductions. It is also lawful to avoid taxes by making charitable contributions. Tax evasion, on the other hand, is a crime. Tax evasion typically involves failing to report income, or improperly claiming deductions that are not authorized. Examples of tax evasion include such actions as when a contractor “forgets” to report the LKR 1, 000,000 cash he receives for building a pool, or when a business owner tries to deduct LKR 1, 000,000 of personal expenses from his business taxes, or when a person falsely claims she made charitable contributions, or significantly overestimates the value of property donated to charity.

Similarly, if an estate is worth LKR 5,000,000 and the executor files a false tax return, improperly omitting property and claiming the estate is only worth LKR 100,000, thus owing much less in taxes. Tax evasion has an impact on our tax system. It causes a significant loss of revenue to the community that could be used for funding improvements in health, education, and other government programs. Tax evasion also allows some businesses to gain an unfair advantage in a competitive market and some individuals to not meet their tax obligations. As a result, the burden of tax not paid by those who choose to evade tax falls on other law abiding taxpayers.

Examples of tax evasion are: ï?~ Failing to declare assessable income ï?~ Claiming deductions for expenses that were not incurred or are not legally deductible ï?~ Claiming input credits for goods that Value Added Tax (VAT)has not been paid on ï?~ Failing to pay the PAYE (pay as you earn a form of with holding tax)installments that have been deducted from a payment, for example tax taken out of a worker’s wages ï?~ Failing to lodge tax returns in an attempt to avoid payment. The following are some signs that a person or business may be evading tax: ï?~ Not being registered for VAT despite clearly exceeding the threshold ï?~ Not charging VAT at the correct rate ï?~ Not wanting to issue a receipt ï?~ Providing false invoices ï?~ Using a false business name, address, or taxpayers identification number (TIN) and VAT registration number ï?~ Keeping two sets of accounts, and ï?~ Not providing staff with payment summaries

Legal Aspects of Tax Avoidance and Tax Evasion Two general points can be made about tax avoidance and evasion. First, tax avoidance or evasion occurs across the tax spectrum and is not peculiar to any tax type such as import taxes, stamp duties, VAT, PAYE and income tax. Secondly, legislation that addresses avoidance or evasion must necessarily be imprecise. No prescriptive set of rules exists for determining when a particular arrangement amounts to tax avoidance or evasion. This lack of precision creates uncertainty and adds to compliance costs both to the Department of Inland Revenue and the tax payer.

Definitions of Tax Mitigation Avoidance and Evasion It is impossible to express a precise test as to whether taxpayers have avoided, evaded or merely mitigated their tax obligations. As Baragwanath J said in Miller v CIR; McDougall v CIR: What is legitimate ‘mitigation’(meaning avoidance) and what is illegitimate ‘avoidance’(meaning evasion) is in the end to be decided by the Commissioner, the Taxation Review Authority and ultimately the courts, as a matter of judgment. Please note in the above statement the words are precisely as stated in judgment. However there is a mix-up of words which have been clarified by the words in the brackets by me. Tax Mitigation (Avoidance by Planning) Taxpayers are entitled to mitigate their liability to tax and will not be vulnerable to the general anti-avoidance rules in a statute. A description of tax mitigation was given by Lord Templeman in CIR v Challenge Corporate Ltd: Income tax is mitigated by a taxpayer who reduces his income or incurs expenditure in circumstances which reduce his assessable income or entitle him to reduction in his tax liability.

Tax mitigation is, therefore, behavior which, without amounting to tax avoidance (by planning), serves to attract less liability than otherwise might have arisen. Tax Avoidance Tax evasion, as Lord Templeman has pointed out, is not mere mitigation. The term is described directly or indirectly by ï?~ Altering the incidence of any income tax ï?~ Relieving any person from liability to pay income tax ï?~ Avoiding, reducing or postponing any liability to income tax On an excessively literal interpretation, this approach could conceivably apply to mere mitigation, for example, to an individual’s decision not to work overtime, because the additional income would attract a higher rate of tax. However, a better way of approaching tax avoidance is to regard it as an arrangement that, unlike mitigation, yields results that Parliament did not intend.

In Challenge Corporation Ltd v CIR, Cooke J described the effect of the general anti-avoidance rules in these terms: [It] nullifies against the Commissioner for income tax purposes any arrangement to the extent that it has a purpose or effect of tax avoidance, unless that purpose or effect is merely incidental. Where an arrangement is void the Commissioner is given power to adjust the assessable income of any person affected by it, so as to counteract any tax advantage obtained by that person. Woodhouse J commented on the breadth of the general anti-avoidance rule in the Challenge Corporation case, noting that Parliament had taken: The deliberate decision that because the problem of definition in this elusive field cannot be met by expressly spelling out a series of detailed specifications in the statute itself, the interstices must be left for attention by the judges.

Tax Evasion Mitigation and avoidance are concepts concerned with whether or not a tax liability has arisen. With evasion, the starting point is always that a liability has arisen. The question is whether that liability has been illegitimately, even criminally been left unsatisfied. In CIR v Challenge Corporation Ltd, Lord Templeman said: Evasion occurs when the Commissioner is not informed of all the facts relevant to an assessment of tax. Innocent evasion may lead to a re-assessment. Fraudulent evasion may lead to a criminal prosecution as well as re-assessment.

The elements which can attract the criminal label to evasion were elaborated by Dickson J in Denver Chemical Manufacturing v Commissioner of Taxation (New South Wales): An intention to withhold information lest the Commissioner should consider the taxpayer liable to a greater extent than the taxpayer is prepared to concede, is conduct which if the result is to avoid tax would justify finding evasion. Not all evasion is fraudulent. It becomes fraudulent if it involves a deliberate attempt to cheat the revenue. On the other hand, evasion may exist, but may not be fraudulent, if it is the result of a genuine mistake. In order to prove the offence of evasion, the Commissioner must show intent to evade by the taxpayer. As with other offences, this intent may be inferred from the circumstances of the particular case. Tax avoidance and tax mitigation are mutually exclusive. Tax avoidance and tax evasion are not: They may both arise out of the same situation. For example, a taxpayer files a tax return based on the effectiveness of a transaction which is known to be void against the Commissioner as a tax avoidance arrangement.

A senior United Kingdom tax official recently referred to this issue: If an ‘avoidance’ scheme relies on misrepresentation, deception and concealment of the full facts, then avoidance is a misnomer; the scheme would be more accurately described as fraud, and would fall to be dealt with as such. Where fraud is involved, it cannot be re-characterized as avoidance by cloaking the behavior with artificial structures, contrived transactions and esoteric arguments as to how the tax law should be applied to the structures and transactions. Tax Avoidance in a Policy Framework We now turn from the existing legal framework in the context of income tax to a possible policy framework for considering issues relating to tax avoidance generally. The questions considered relevant to a policy analysis of tax avoidance are: What is tax avoidance? Under what conditions is tax avoidance possible? When is tax avoidance a ‘policy problem? What is a sensible policy response to tax avoidance?

What is the value of, and what are the limitations of, general anti-avoidance rules? The first two questions are discussed below What is Tax Avoidance? Finance literature may offer some guidance to what is meant by tax avoidance in its definition of ‘arbitrage’. Arbitrage is a means of profiting from a mismatch in prices. An example is finding and exploiting price differences between New Zealand and Australia in shares in the same listed company. A real value can be found in such arbitrage activity, since it spreads information about prices. Demand for the low-priced goods increases and demand for the high-priced goods decreases, ensuring that goods and resources are put to their best use. Tax arbitrage is, therefore, a form of tax planning. It is an activity directed towards the reduction of tax. It is this concept of tax arbitrage that seems to constitute generally accepted notions of what is tax avoidance. Activities such as giving money to charity or investing in tax-preferred sectors, would not fall into this definition of tax arbitrage, and thus would not be tax avoidance even if the action were motivated by tax considerations. It has been noted that financial arbitrage can have a useful economic function. The same may be true of tax arbitrage, presuming that differences in taxation are deliberate government policy furthering economic efficiency.

It is possible that tax arbitrage directs resources into activities with low tax rates, as intended by government policy. It is also likely to ensure that investors in tax-preferred areas are those who can benefit most from the tax concessions, namely, those facing the highest marginal tax rates. If government policy objectives are better achieved, tax arbitrage is in accordance with the government’s policy intent. Tax avoidance, then, can be viewed as a form of tax arbitrage that is contrary to legislative or policy intent. What Makes Tax Avoidance Possible? The basic ingredients of tax arbitrage are the notion of arbitrage, and the possibilities of profiting from differentials that the notion of arbitrage implies. This definition leads to the view that three conditions need to be present for tax avoidance to exist. A difference in the effective marginal tax rates on economic income is required. For arbitrage to exist, there must be a price differential and, in tax arbitrage, this is a tax differential. Such tax differences can arise because of a variable rate structure, such as a progressive rate scale, or rate differences applying to different taxpayers, such as tax-exempt bodies or tax loss companies.

Alternatively it can arise because the tax base is less than comprehensive, for example, because not all economic income is subject to income tax.

o An ability to exploit the difference in tax by converting high-tax activity into low-tax activity is required. If there are differences in tax rates, but no ability to move from high to low-tax, no arbitrage is possible.

o Even if these two conditions are met, this does not make tax arbitrage and avoidance possible. The tax system may mix high and low-rate taxpayers. The high-rate taxpayer may be able to divert income to a low-rate taxpayer or convert highly-taxed income into a lowly-taxed form. But this is pointless unless the high-rate taxpayer can be recompensed in a lowly-taxed form for diverting or converting his or her income into a low-tax category. The income must come back in a low-tax form. The benefit must also exceed the transaction costs. This is the third necessary condition for tax arbitrage.

o Since all tax systems have tax bases (The thing or amount to which a tax rate applies.

To collect income tax, for example, you need a meaningful definition of income. Definitions of the tax base can vary enormously, over time and among countries, especially when tax breaks are taken into account. As a result, a country with a comparatively high tax rate may not have a high tax burden (Total tax paid in a period as a proportion of total income in that period. It can refer to personal, corporate or national income. ) if it has a more narrowly defined tax base than other countries. In recent years, the political unpopularity of high tax rates has lead many governments to lower rates and at the same time broaden the tax base, often leaving the tax burden unchanged. )that are less than comprehensive because of the impossibility of defining and measuring all economic income, tax arbitrage and avoidance is inherent in tax systems. Examples of Tax Arbitrage/Avoidance The simplest form of arbitrage involves a family unit or a single taxpayer. If that family unit or taxpayer faces differences in tax rates (condition 1 above), and condition 2 above applies, then the third condition automatically holds.

This conclusion follows because people can always compensate themselves for converting or diverting income to a low tax rate. An example of such simple tax arbitrage involving a family unit is income splitting through, for example, the use of family trust. An example of simple tax arbitrage involving a single taxpayer is a straddle whereby a dealer in financial assets brings forward losses on, say shares, and defers gains while retaining an economic interest in the shares through use of options. Transfer pricing and thin capitalization practices through which non-residents minimize their tax liabilities are more sophisticated examples of the same principles. Multi-party arbitrage is more complex; the complexity is made necessary by the need to meet condition 3 above, that is, to ensure a net gain accrues to the high-rate taxpayer. In the simpler cases of multi-party income tax arbitrage, this process normally involves a tax-exempt (or tax-loss or tax-haven) entity and a taxpaying entity. Income is diverted to the tax-exempt entity and expenses are diverted to the taxpaying entity. Finally, the taxpaying entity is compensated for diverting income and assuming expenses by receiving non-taxable income or a non-taxable benefit, such as a capital gain.

Over the years many have indulged in numerous examples of such tax arbitrage using elements in the legislation at the time. Examples are finance leasing, non-recourse lending, tax-haven(a country or designated zone that has low or no taxes, or highly secretive banks and often a warm climate and sandy beaches, which make it attractive to foreigners bent on tax avoidance and evasion ) ‘investments’ and redeemable preference shares. Low-tax policies pursued by some countries in the hope of attracting international businesses and capital is called tax competition which can provide a rich ground for arbitrage. Economists usually favour competition in any form. But some say that tax competition is often a beggar-thy-neighbor policy, which can reduce another country’s tax base, or force it to change its mix of taxes, or stop it taxing in the way it would like.

Economists who favour tax competition often cite a 1956 article by Charles Tiebout (1924-68) entitled “A Pure Theory of Local Expenditures”. In it he argued that, faced with a choice of different combinations of tax and government services, taxpayers will choose to locate where they get closest to the mixture they want. Variations in tax rates among different countries are good, because they give taxpayers more choice and thus more chance of being satisfied. This also puts pressure on governments to be efficient. Thus measures to harmonize taxes are a bad idea. There is at least one big caveat to this theory. Tiebout assumed, crucially, that taxpayers are highly mobile and able to move to wherever their preferred combination of taxes and benefits is on offer.

Tax competition may make it harder to redistribute from rich to poor through the tax system by allowing the rich to move to where taxes are not redistributive. Tactics Used by Tax Evaders Moonlighting Tax evasion at its simplest level merely involves staying out of the tax system altogether. The Revenue deploys small teams of volunteer officers to carry out surveillance to track down moonlighters. Early success was followed up by the deployment of compliance officers in virtually every tax office. Revenue Investigation Officers routinely scan advertisements in local newspapers or shop windows and even before the advent of the modern personal computer they frequently had access to reverse telephone directories to track down moonlighters from bare telephone number details. They also study bank and other financial institutions deposit and loans databases, customs records, and star class hotel bookings for private functions and ceremonies to identify rich individuals who maybe evading taxes.

Non Extractive Fraud Alternatively it can arise because the tax base is less than comprehensive, for example, because not all economic income is subject to income tax. ï?~ An ability to exploit the difference in tax by converting high-tax activity into low-tax activity is required. If there are differences in tax rates, but no ability to move from high to low-tax, no arbitrage is possible. ï?~ Even if these two conditions are met, this does not make tax arbitrage and avoidance possible. The tax system may mix high and low-rate taxpayers. The high-rate taxpayer may be able to divert income to a low-rate taxpayer or convert highly-taxed income into a lowly-taxed form. But this is pointless unless the high-rate taxpayer can be recompensed in a lowly-taxed form for diverting or converting his or her income into a low-tax category. The income must come back in a low-tax form. The benefit must also exceed the transaction costs. This is the third necessary condition for tax arbitrage. Since all tax systems have bases that are less than comprehensive because of the impossibility of defining and measuring all economic income, tax arbitrage and avoidance is inherent in tax systems. This involves profit switches or timing differences, for example:

o Post dating Receipts

o Ante dating Expenditure

o Hidden Reserves

o Incorrect accounting of transactions such as showing an income as a payable.

o Stock manipulation Perhaps the most common place method seen in practice is the manipulation of stock to produce the desired “profit”.

It is not unknown for the evaders’ Accountant to be involved – putting at risk the livelihood and, if the amount involved is significant, personal liberty! The most blatant case of this kind is where the Accountant virtually treated this as year end tax planning. Based upon the formal disclosures made by the evader under the Hansard procedure to the Inland Revenue (in which he implicated the Accountant and in connection with an account in a false name also his Bank Manager), the following scene can be recreated: “Studying the draft accounts the Accountant did a quick calculation to work out what range of figures could be used for closing stock in hand without giving rise to suspicion. He then apparently discussed with the client the impact on net profit of reducing Closing Stock.

Arrangements were then made for the audit to take place and in the meantime some stock was moved off site! “The Accountant and Bank Manager who assisted the evader are both guilty of conspiracy to defraud – it matters not that they made no financial gain themselves. Extractive Fraud This might take the form of Suppressed receipts or inflated outgoings: Suppressed Receipts Typically these involve defected mainstream takings and often an undisclosed bank account. However the more resourceful evader may take advantage of special arrangements or unexpected receipts: Where the proprietor or director personally deals with some customers it may be possible for cheques to be made out in a manner which facilitates diversion. Alternatively cheque substitution may be used, such that the otherwise “off record sale” cheque is banked and an equivalent amount of “on record cash” is extracted.

It is not unknown for late cash payment of credit sales to bypass the bookkeeping system with the debt subsequently being written off as bad. Unexpected receipts always present a good opportunity for deflection. For example:

1. Scrap sales

2. Insurance or bad debt recoveries

3. Refunds, rebates or discounts

4. Returned goods sold for cash, disposal of fully written down assets and windfalls in general.

The evader may take advantage of a new business opportunity, which remains hidden, and off record. Examples of this seen in practice include:

1. the dentist with three practices of which only two were discloses

2. the off record sale of hitherto obsolete car parts to the burgeoning classic car market Inflated Purchases & Expenses Where the ability to deflect receipts is too difficult the evader might draw cash from the business bank account and disguise such withdrawals as some form of legitimate business expense. In practice this often involves the use of “ghost” employees or fictitious outgoings to cover such extractions. Fictitious outgoings have to employ the use of false invoices. These might take the form of altered invoices, photocopied or even scanned “blanked” versions of genuine invoices, completely bogus invoices or even blank invoices supplied by an associate.

Another approach seen in practice involved the use of a seemingly unconnected off shore company to raise invoices for fictitious services. To hide the true ownership of the off shore company the evader uses a “black hole” trust to hold the shares. Essentially this involved a compliant non-resident trustee and “dummy” settler – the trustee providing “stooge” directors as part of the arrangements.

Employment Tax Evasion Schemes Employment tax evasion schemes can take a variety of forms. Some of the more prevalent methods of evasion include pyramiding, employee leasing, paying employees in cash, filing false payroll tax returns or failing to file payroll tax returns. Pyramiding “Pyramiding” of employment taxes is a fraudulent practice where a business withholds taxes from its employees but intentionally fails to remit them to the relevant departments. Businesses involved in pyramiding frequently file for bankruptcy to discharge the liabilities accrued and then start a new business under a different name and begin a new scheme. Employment Leasing Employee leasing is another legal business practice, which is sometimes subject to abuse.

Employee leasing is the practice of contracting with outside businesses to handle all administrative, personnel, and payroll concerns for employees. In some instances, employee-leasing companies fail to pay over to the authorities any portion of the collected employment taxes. These taxes are often spent by the owners on business or personal expenses. Often the company dissolves, leaving millions in employment taxes unpaid. Paying Employees in Cash Paying employees in whole or partially in cash is a common method of evading income and employment taxes resulting in lost tax revenue to the government and the loss or reduction of future social benefits. Filing False Payroll Tax Returns or Failing to File Payroll Tax Returns Preparing false payroll tax returns understating the amount of wages on which taxes are owed, or failing to file employment tax returns are methods commonly used to evade employment taxes. Payments of Benefits These include free benefits such as personal entertainment, excessive allowances for foreign travel, provision of educational schemes (foreign education) to only preferred employees, car and driver paid by company etc are simple examples.

Conclusion

I hope that I have made clear the difference between doing things right and legitimately and in a fraudulent manner. Whether you are a taxpayer or a consultant it is important to make sure that you understand the nuances of good tax planning. Whilst it is understood that tax planning is becoming more difficult and there is only a thin line between what is right and wrong it obviously requires the expert to do the needful. However be careful not to be tricked by those who claim to be experts in tax planning when they are mere computational experts.

Starting a church daycare is a good alternative for one who wants to earn income, putting to use both homemaking and knowledge at parenting. This is how to start a church daycare.

First, familiarize yourself with state laws and regulations in your area and plan accordingly. Take into account area requirements, meals, activities, equipment needs, personnel and other regulations.

Design a business plan, conforming to state laws’ requirements on childcare institutions. A business plan is handy when sourcing out funds from banks and lenders.

Coordinate with your local church and discuss your business plan. A church or a local organization that will back you up with financial and other ways of support is necessary to start-up and getting clients. Endorsements from them will bring in potential clients.

Scout for a place near your local church. This should be spacious enough to accommodate your target clientele. This should be accessible and has a good parking space.

Childproof your daycare center. Buy all necessary supplies and equipment. You can get help from members of your church if you needed to rent or borrow equipment for awhile.

Increase your knowledge in child care. Be familiar with first aid administration and CPR. Plan your staff. Coordinate with your church to scout applicants. Ensure that they are qualified for childcare functions and licensed in CPR before you start a church daycare.

Advertise your day care facility. Flyers, pamphlets. posters, local radio plugs and newspaper ads can help bring in clients. Of course, during congregation meetings, you can enlist the help of friends to do the advertising for you.

The steps are but the staples. For ideas, remember that with your church backing you up, many would have bright ideas and pitch in to help. You just need to coordinate with the right people.

When looking to pay off credit card debt, one of the most overlooked options many people have are government grants. Many people do not look into these grants because they simply do not know about them. However, the government sets aside billions each year just for this purpose, to give them away. If you are one of the millions of people who are suffering from credit card debt, you definitely want to consider applying for a grant from the government.

Government grants are available, the key is finding them. If you are looking for debt relief, you should understand that there are ways to get out of this debt and it is up to you to seek the help you need and deserve. We all get into trouble now and then with our financial situation, however, if the help is available, why not take advantage of it.

Why do these grants make more sense when it comes to credit card debt elimination? Simply put, these grants are far easier to obtain than traditional loans. Traditional loans may require some form of collateral or security deposit, grants do not require these because they are provided by the government.

The key to grants is to be creative. The government is willing to jump-start the economy by providing small business grants. If you apply for and receive a grant for several thousand dollars, you can eliminate your debt by using the money earned in your business to pay them off.

In order to get the grant the people accepting your application will need to review your situation. In other words, they will be looking at many things. First, they will be looking at if you have the ability to pay the money you currently owe, then they will take a look at the debts you currently have, and finally your financial ability to repay what you owe and still maintain your current debt. If you can prove that you cannot pay back this money, the grant will likely be yours.

Government grants can do many things for you. First, they can provide you with the money you need for debt relief without having to provide security or collateral. Second, these grants can save you from having to file for bankruptcy. Third, no repayment is necessary, this is type of financial aid, and it cannot be taxed and does not accrue any interest. Finally, it can instantly make you debt free, which cannot be said about other types of debt relief solutions.

Overall, obtaining a government grant just makes sense when you are swimming in debt that you cannot get out of.

Federal and State agencies are unanimous in their view that the U.S. unclaimed or lost money is on rise with each passing day. The unclaimed databases are swelling with unclaimed money as new and lost money is being added at a much faster rate.

While California is reporting unclaimed money to the tune of .7 Billion, New York’s pile of unclaimed money has swelled up to .9 billion. That’s such great financial news for U.S. residents in this bleak economy. As the States are taking new measures to disburse unclaimed funds to the owners, new money is still being added at a frantic pace.

It is not only the state and federal treasuries that are experiencing a swell in their funds. Many of the major banks are disclosing that the volume of unclaimed bank balances have been growing at a rapid pace. In a recent Press Release, about half of a million dollars in unclaimed money from former Washington Mutual Bank customers in Wisconsin is still waiting to be claimed.

“The Federal Deposit Insurance Corporation closed the bank in September 2008. The FDIC then deposited about half of a million dollars in Wisconsin’s unclaimed property account. The money belongs to customers who had accounts at the bank. There are about 8,300 accounts belong to Wisconsin customers. The state treasurer’s office says one account has more than ,000 in it.”

According to the National Association of Unclaimed Property Administrators (NAUPA), almost billion in unclaimed cash and property is sitting in state treasuries and other agencies just waiting to be claimed, and the figures are going up every year. Most of us are switching jobs across the U.S. as the economy keeps on taking different turns.

As is normal with the job and location switching, utility bills, bank accounts, Tax refunds, pension funds and other kinds of personal assets are either left out of our check list or forgotten. This happens with millions of citizens. The result is a lot of unclaimed cash and property that have no owner. This money migration continues to happen at a rapid pace. As the statutory limit is reached for unclaimed money and property, it is transferred to the state treasuries where it is marked as unclaimed or abandoned.

The volume of unclaimed money has reached such proportions that Oprah Winfrey had to distribute unclaimed money to the rightful owners. She agreed with the experts that 8 out of 9 families in the U.S. are still the owners of some lost funds somewhere. Is it a surprise that the combined state owned unclaimed cash has grown up to billion? It is no surprise that within a short span of time, it might reach 0 billion – good enough to boost the economy of a large state or even a country.

Bankruptcy is a situation where a person legally declares that his or her present financial condition doesn’t allow repayment of outstanding debts. The person is called a bankrupt. The term is equally applicable to both business and individuals. There are two types of bankruptcy based on how they are filed in a court. Bankruptcy can be both voluntary and involuntary. It should be kept in mind that involuntary bankruptcy is rare.

Voluntary bankruptcy- The petitioners here are debtors,
Involuntary bankruptcy- The petitioners are the creditors in this case. This method is used to enforce the rights of the creditors.

The recent recession has shot up the bankruptcy filing in USA. There has been a huge number of bankruptcy filing by several large American corporations like- Lehman Brother Holdings (2008), Washington Mutual (2008), CIT Group, etc. In 2008 alone there was about 1,117,771 bankruptcy filings out of those 744,424 were chapter-7 bankruptcies, while 362,762 were chapter-13. Chapter-15 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, it is aimed at preventing cross border insolvency by foreign firms with debts here.

In the state of Maryland for example filings outpaced national filing rate by 20% with a 36% rise in both personal and business bankruptcy filings in the last financial year. It rose to more than 40% in the year 2008 reported Washington Post.

It has been seen than individual bankruptcy cases are multifaceted and complex. However, in most cases excessive medical bills have been the cause of personal bankruptcy filings.

In US constitution provision for bankruptcy has been mentioned in Article-1, Section-8, Clause-4. In 1978, the bankruptcy Reform Act came into existence and since then it has been reformed several tomes. Title-18 and Title-26 of U.S Code deals with the criminal and tax related aspects of bankruptcy law. Title-28 of U.S. Code deals in details the procedures related to bankruptcy.

Federal courts have exclusive jurisdiction on bankruptcy cases. As result an entity can’t file for bankruptcy in a state court. Most of the times we see filings are made under chapter-7, chapter-11 and chapter-13. In Chapter-7 there is an extensive guideline on a court supervised liquidation of debtor’s property. A trustee takes up the property and converts in liquid asset.

Chapter-11 stresses on the reorganization of a commercial entity in a manner such that it is able to continue business as well as repay creditors. The reorganization is of course court approved. The entity must provide a disclosure statement stating the plan for reorganization. This will enable the creditors to evaluate the plan too.

Chapter-13 is used to make debt related adjustment to an individual with a regular source of income. Many people who don’t qualify the means test for chapter-7 bankruptcy filing file under this section. Chapter-13 is advantageous because it enables debtors to withhold important assets like a house.

Chapter-12 is meant to provide relief for family farmers and fishermen with regular income. The process is very similar to filing bankruptcy under chapter-13 of U.S Code.

Federal and state governments have their own exemption lists of items that can’t be claimed by creditors as part of bankruptcy. It is important that you consult an experienced Maryland bankruptcy lawyer to protect you from creditors.

There is a lot of expertise needed to achieve this when you have bad credit and you might want to consider looking for professional aid but if you feel confident, there are things you can do on your own.

Bad credit is always an obstacle when you need finance. Lenders won’t grant money to someone they think won’t be able to repay it and that’s what bad credit tells them.

Thus, further assurance of repayment needs to be offered in order to convince them. The key is to use the benefits of certain types of loans to your advantage and find a way out whenever a loan turns out too onerous.

Government Loans For Students Do Not Consider Credit Score or History

Those loans for students that are granted by the government do not consider credit score or history as a variable for approval. This is due mainly to the fact that those who apply for these loans have no credit history at all but also because these loans are meant for helping those going through underprivileged situations to pay their way through college and graduate.

Stafford loans (granted by the US department of education) and Perkins loans which are also granted by the federal government but are assigned according to the needs of the applicants and not on a first arrived first served basis are examples of the above. As long as there are no records of non-attendance of federal loans, your credit score and history won’t be an obstacle to obtaining a federal student loan.

PLUS Loans When The Money Granted Is Not Enough

PLUS loans are meant to fill a gap that turns federal loans into an imperfect financial source. Federal loans presuppose that the applicant will have aid from family members and thus, the amount of money granted usually doesn’t cover for all the costs of college studies. PLUS loans are granted to parents to let them help with their children college payments.

PLUS stands for Parent Loan For Undergraduate Students and are low interest loans for parents that let them borrow up to the full cost of their children education as long as there are no other financial aid in which case, the amount of additional aid must be deducted from the overall PLUS loan available amount. These loans require credit checks, but the credit report that will be verified is the parents’ and not the student’s.

Private Bad Credit Student Loans And Consolidation

Sometimes federal loans are simply not enough and you need to resort to private funding. PLUS loans are an option but are not always available if parents don’t meet the income or credit requirements. Bad Credit Private Student Loans are available as well as No Credit loans, only critical delinquencies like default or bankruptcies can prevent you from getting finance if you can afford it.

However, you need to bear in mind that the cost of financing will be higher with bad credit and that whenever possible you should consolidate your student debt if you can obtain a lower interest rate due to an improvement on your credit score and history.

Payment protection insurance (PPI) has taken a bashing recently. PPI is a type of insurance designed to protect repayments on financial products if borrowers find that they are in financial difficulty.

PPI has been examined by the Financial Services Authority, criticised by Which? and is now under investigation by the Office of Fair Trading. Most of these organisations are concerned about protecting consumers’ rights. They are worried about:

whether consumers are sufficiently well informed at point of sale to make decisions about whether to have PPI

the wide variation in the cost of PPI policies

the huge profits made by lenders offering PPI because of the relatively few claims made by borrowers

and the lack of PPI providers who are not linked to banks or other lenders.

Given these concerns, it’s a good time to find out more about whether PPI is really the right choice for borrowers.

Why Have PPI?

It’s difficult for borrowers to know how their financial circumstances are going to change. When they are taking out a mortgage, loan, credit card, store card or other financial product, the sales person often offers PPI. The reasons why it might be a good idea are:

if someone becomes unemployed or is made redundant

if a long term illness prevents someone from working

if someone is injured and is unable to work

All of these circumstances mean that borrowers might not be able to meet the repayments on the mortgage, loan, credit card or store card. This could result in arrears, defaults, County Court Judgements (CCJs) and, depending on the type of loan product, the loss of their home. Payment protection insurance is designed to make sure that repayments are met, avoiding this sticky financial situation.

Inside PPI

PPI is available to most people aged 18 to 65 who are employed for at least 16 hours a week or have been self-employed for a long period. Once borrowers have signed up for the insurance, they have to wait a certain period before making a claim. This is usually 60 to 120 days. Once they do make a claim and have it accepted, their payments can be covered for a period of 12 months or more, depending on the policy.

One key thing that borrowers should be aware of is that the sellers of some financial products add the cost of the PPI policy to the credit being offered. This means that borrowers can end up paying interest on the insurance policy. This is one of the many reasons that PPI selling has been criticised. Borrowers should also look into the cost of the insurance, as this varies widely.

Beyond PPI

Many borrowers do not realise that they do not have to take out PPI at the time of buying a financial product and the people who are selling PPI often do not make this clear. There are some stand alone PPI providers who may provide a better choice. Borrowers who repay loans from earnings should also consider an income protection policy, which will protect most of their income rather than individual financial products.

An unemployed student has to bear the wrath of lenders as all the attempts to avail loan fail. Since lenders are unsure of getting the money back on time, they refuse to lend loans to such borrowers. Unemployed people are considered as risky borrowers. However, there is a section of lenders who approve loans to such borrowers. If a person cannot afford to pay a higher rate of interest on the loan, one can make use of personal loan unemployed students. These loans are specifically meant for unemployed students. With these loans a borrower can easily meet all the urgent needs.

These loans are specifically designed for the convenience of those who no longer have a source of income. These loans can be availed without much fuss. Looking online can help a borrower avail loans at a lower rate of interest. This will also help save a substantial amount of money. An unemployed person can easily meet all the short term needs through these loans. This kind of loan provides an opportunity to improve the financial situation too. A student can use the loan to meet all the educational expenses, pay back student loans etc.

These loans can be availed not only to fund the necessities of life but also recreational activities, buying a car or renovating your home.

Loans for unemployed features:

o Low interest rate

o Repayment in small monthly installments as per the budget

o Flexible repayment options like overdraft, standby facility and holiday period

Student cash loan presents various options to unemployed students. It allows them to use the loan for any of the personal needs. They can also clear impending debt problems through these loans. These loans offer an excellent opportunity to such borrowers meet their various needs. Unemployed people can avail loans and meet their various needs. This is contrary to the fact that loan lenders usually stay clear of unemployed students as they don’t have a regular source of income. Unemployed loans can help meet financial needs quickly. Looking online can help avail loans at a lower rate of interest too.

An unemployed person may be finding it extremely difficult to meet the urgent needs. Such borrowers can make use of unemployed personal loan. These loans can be used for any of the personal needs. There is absolutely no restriction on the usage of the loan. These loans provide instant relief to those in need of money. One need not worry about the inability to avail loans at all. Experienced financial specialists ca help get the best deal on the loan. These loans also enable people meet their various needs quickly.

Bad credit personal loans help people who do not have good credit scores to get personal loans for taking care of their financial needs. So, if you have poor credit, how can you ensure that your application for a personal loan is approved?

There are many lending institutions which are available today who are willing to offer loans to people with poor credit ratings. These specific loans are given on different terms and conditions. In such cases, the lenders usually expect some form of collateral from the borrowers, which may be in the form of a house, jewelry or a car. Generally, the terms of repayment on such secured loans are more flexible and convenient for the borrower, which helps them to repay their debts without too much financial strain.

However, those individuals with bad credit history seeking personal loans without any security may face some difficulties in securing and servicing the loans, especially since they have to pay a higher rate of interest on the loans. Besides, these individuals may also be able to get only low amounts of money for the loan, which has to be repaid within a shorter time frame. Many people prefer secured loans as the best option, which helps them in managing their finances well so that they can pay all their outstanding debts easily.

Improve your credit ratings using bad credit loan

These loans provide you with an opportunity to correct your past mistakes where you may have defaulted on making payments; made late payments or got involved in other things which might have affected your credit history. Remember, your past credit history can have a huge impact on your ability to get a loan quickly from the lenders, as most of them are not willing to take such big risks on borrowers. However, people with a poor credit score can still have access to loans for personal use, if they are willing to pay a high rate of interest.

These loans dedicated for people with poor credit ratings can allow you to resolve all your issues related to bad credit where you can use these loans to pay all your outstanding debts on time. If you want to get this type of a loan for personal use, then you need to shop around and look for lenders who are willing to offer you the best rates. It is important to read the terms and conditions carefully and see if it suits your budget and requirements. The best way is to find an affordable scheme that can help you to repay your monthly installments on time.

You need to be careful about lending companies whose sole motive is to make profit and dupe customers by charging them exorbitant interest rates and fees for lending them loans. Always make sure to verify the credentials of the company while dealing with them to see that you get a fair deal on your loan.

It helps to get a bad credit loan from the highly recommended lenders.

For a long time, India has led the worldwide Business Process Outsourcing industry, particularly its great pool of IT graduates and British-influenced British culture. In the last ten years, they quickly formulated the skills set blended with the capacity of creating mass output with the millions of professionals they certified every year. They became the global reference for providing just about every type of ITO and Business Process Outsourcing services in every corner of the world.

With a total market estimated at around US$ 70 billion, the Indian companies are reported to be responsible for approximately U$ 50 billion. That is roughly 70 %. The “TWITCH” companies (the 7 families: Tata, Wipro, Infosys, TCS, Cognizant and HCL), which alone, according to Gartner Research, have 36 % of the US IT services market, and 51 % of the European market, are the real big players, and also according to Gartner are proving to be IBM and EDS´s greatest competitors.

Aside from these giants, India still had some 250 other smaller companies that generate hundreds of millions of dollars each every year, making the Indian companies the most cash rich companies on the globe. This means that, even though they are seeing more competition from other country destinations and companies, they can simply buy the market. Specially in the current times where cash is king. This is the reason why we are

seeing the Indian companies move into all markets where there is a justifiable return on investment. Be it by the ways of the local market, such as Brazil or Poland, be it to use it as a nearshore platform to markets like the US and Europe.

Clearly these Indian Companies were the whales in this great ocean of Business Process Outsourcing industry, ready to devour the small fishes which were the Companies from other markets around the globe. They’re just like fishes financially, compared to the whales of the cash rich Indian Competitors. So what can these companies do to step up to the challenge?

Beating The Whales

Some groups of companies like those in Brazil have adopted a collaborative approach, which was being called the “whale strategy”. In the early 70´s, Walt Disney released an animated flick called Fantasia, considered one of his first masterpieces´s. In one of the scenes, a hungry big whale is after a large group of fish, which find shelter under a big rock, where they stay trapped, since the hungry whale stayed put patiently waiting for its main course.

This is when, one of the smarter fish, comes up with the idea that, if they came out of underneath the big rock in a formation that reproduced a whale, the hungry whale would be made to believe it was another whale too.

In Brazil where the collaborative spirit is strongest, many companies have started several different consortium, building “whales”, so they can have greater critical mass, combine different competitive advantages and capabilities, and also have a more financial clout. The challenge is to create a greater common good that the personal interest, in order to keep every ones dedication and toughness. In this case, the greater need to become a relevant international player plays a heavier role for every company, that if were to go alone, probably would not survive the first year.

Here in the Philippines however, a growing number of American companies and other multinational companies were moving their operations from India to a determined Business Process Outsourcing competitors in Southeast Asia: The Philippines. Although India has a growing share of the pie, the Philippines is fast overtaking the Business Process Outsourcing giant because of it’s all important advantages: improved infrastructure, customer service-oriented workforce, and deep admiration, understanding and efficient practice of the English language and American culture. The Philippines does not only banking on one option alone but also using India’s weaknesses as it’s strengths. This is the main reason why it stands out against whale like no other could.

Unlike the other players, the Philippines though only a distant second biggest service provider in the globe after India has became the largest Business Process Outsourcing destination int the Asia Pacific. The Business Process Outsourcing sector actually grew by 25 percent in 2009 while the Philippine economy almost came to a grinding halt, rising at less than 1 percent. The industry yielded US billion in revenues last year, up by 19% year on year. This still pale in comparison to that of Indian numbers though.

India: Dropping Its Momentum in the Business Process Outsourcing Contest?

According to a survey conducted by Kelly Services Inc. Michigan, India is losing its position as the number one choice of US companies for backroom operations. Suffering Quality – For all its advantages, India may be quickly losing its momentum as the leader of the Business Process Outsourcing industry. The Philippines is fast catching up to India in terms of servicing the growing Business Process Outsourcing market. It’s telecommunication infrastructure is immensely better and companies are more safely set up and maintained because of the stable environment, maximizing economic incentives and extremely competent human resources. American, European and Australian companies that have already outsourced to the country are currently saving 40% to 60%, which translates to boosted profits and capacity for expansion.

More importantly also, while many Indians do speak English, their accent is still too thick, which may result in difficult conversations with frustrated customers. This could be one of the factors in the decision by Tampa-based Sykes Enterprises to move some of its call center operations from Bangalore to the Philippines, as reported by The Motely Fool, a commercial website about investment and finance, and the Tampa Tribune.

Another very promising industry is outsourced medical transcription, which thrives in the immense medical talent pool of the Philippines. The large number of nurses, medical technologists, doctors and specialized medical transcriptionists in the country has been able to meet the increased demands of US hospitals, which are now required by the law to convert medical records into data format. With all of these positive qualities going for the Philippines, all signs point to the tide of battle shifting soon in its favour.

Numerous large companies have already set up operations in the Philippines, such as MSN-Microsoft, AT&T, IBM, Washington Mutual, Sallie Mae, Expedia, Intuit, Transunion, Alltell and Bellsouth. Reading from all present indications, the future of Business Process Outsourcing or Business Process offshoring is clearly not India, but the Philippines. More and more small and medium-sized American companies have also chosen the Philippines as their Business Process Outsourcing headquarters of choice.