Not Much on the Tax Front, but some interesting EITC Changes

(More regular blogging after I take care of a few mega projects)

I much prefer a sleepy season when it comes to changes in tax regulations. And this year isn't delivering a ton of complicated changes on the individual front. There are some changes, but nothing that inspires a lengthy column. Gone is the 2009 and 2010 "Making Work Pay" credit which reduced taxes up to $400 singles/$800 married filing joint. Some tax payers are going to be surprised by a lower refund. The credit was replaced in 2011 with the Payroll Tax cut applicable to the employee and was far more generous. Hopefully no one spent their paycheck and more counting on a similar size refund. But I'm sure there will be a few people screaming as the Making Work Pay Credit was "refundable", adding gravy to other refundable credits.

Speaking on refundable credits, the United States-Korea Free Trade Implementation Act amended the IRS code sections re: penalties on preparers who don't exercise due diligence (asking the right questions, conducting a mini-investigation of sorts). The penalty for failure to exercise due diligence moves from $100 to $500 (per return). Additionally, the prepare's checklist must be filed along with the return, not just kept on file. One has to wonder if a client is worth taking with this sort of penalty. The $100 penalty is a good reminder to exercise due diligence. A $500 penalty is big. Certain clients require a lot of extra effort to validate the validity of their claim, from the status of the children they are claiming to the accuracy of the self-employment income they present.

There is so much commentary to offer on the penalty as well as welfare credits flowing through the 1040, but I will leave my post at that and with a plea to taxpayers to act with complete yashrut because anything less puts not just the taxpayer at risk b'olam hazeh, but the preparer and his/her livelihood too.

Brutally Honest

If you have not seen this interview with Rabbi Schacter of AMI magazine, then you should head on over to VIN and check it out for yourself. I'm absolutely blown away that it was a) spoken and b) published.

I simply don't know enough about Batei Din to even comment or weigh in with an opinion. However, I was just discussing with my husband the fact that when you have a dispute with a frum owned business, e.g., that you are simply stuck between a rock and a hard place. American small claims courts are inexpensive, but you risk your reputation to use them to settle a claim. To take a person who owes you to a Beit Din is costly (or at least that is my impression based on the amount my friend and her former husband paid to have a get written up after all was settled in family court) and the cost is underwritten by the litigants. Rabbi Schacter talks about a million dollar dispute. Those with multi-hundred or a couple thousand in dispute have little choice but to sit it out and hope that they get something someday. And, if they do, they have to wonder if what they get will be taken back in a bankruptcy proceeding. Unfortunately I know of far too many cases where people have not been paid, but they simply have no leverage. And, yes, I'm bitter about it. It destroys the foundation of a trustworthy and honest society!

Lakewood Scoop: You Should Be Ashamed of Yourself

Hat Tip: A reader who writes "now I've seen it all".

The Lakewood Scoop, who only 4 short months ago was alerting readers that a MLM that many frum people had placed their money and energy into had gone bankrupt leaving others holding the bag and causing a bit of commotion (TLS Link) has just put up an advertisement fronting as a news story for some type of budding scam promising the kollel man and others the starts. It is brought to you by a Yaakov (Jack) Rottenberg via the Lakewood Scoop. Here is the text (abbreviated):

[Advertorial] Question: Are you sitting in Kollel wondering how you are going to be paying your monthly bills? Are you working 9 to 5 without covering your monthly bills, or do you cover your monthly bills but do not to have any accumulated savings? Are you tired of having to work month after month only to have to pay the same bills and do the same work over and over? Is the economy putting you under stress?

Well here is the answer for you,

Hi, my name is Yaakov Rottenberg, and I’ve been in this exact situation before and B’H by joining this business my situation has changed completely. This has been very successful for me and all my associates.

I’m talking about a billion dollar company available in other states that has just opened in New Jersey giving anyone with a vision the opportunity to earn UNLIMITED income based on what they put into it.

“You see, when you work you get paid for the work you produce but, you need to keep on producing the work to get paid”.

Imagine if you can work once diligently and then off that make residual month to month income for the rest of your life.

NOT POSSIBLE??

INCORRECT!!

With this opportunity you can do exactly all this and hopefully achieve FINANCIAL FREEDOM.

I’m not only talking about being able to get all the extras in life (although that’s also nice), we are talking about simply having an income that will pay your monthly bills month after month after month for the rest of your life.

The company was founded in 2006 & has quickly risen to one of the fastest growing companies in the US and one of the top fortune 500 companies.

This is the perfect business for anyone, whether you already have a business going, or whether you are sitting in kollel, whether you are old, young, single or married.

In this business you can work on your own schedule, with your own hours, at your own convenience and at your own pace.

Here are some quotes from other associates of mine. . . . . . . .

Lakewood Scoop, where is your yashrut or is (your) money all that matters? The man doesn't even NAME his company, but promises lifetime income served up on a silver platter. Be prepared to al chet for placing a stumbling block before the blind. Surely you can recognize the scam pattern!?! You were only just alerting the public to a scam 4 months ago and now you are hosting a shameless plug for an unnamed company? The klal's money, time, and energy is not hefker. You and I know full well that those who believe don't have what to risk (and these "opportunities" require "investment").

You should take this advertisement down immediately! This is shameful and desperate. Time to get back to the Torah basics and time to care about other people's money (or lack thereof).

A few signs an "opportunity" will leave you holding the bag:

*You must to pay to play.

*To get $paid$ you need to bring people into the business. (Stable, successful businesses do not seek to grow indiscriminately and indefinitely, they target markets, create niches, have HR departments that select who they want representing their company and product).

*Code words: "Financial Freedom" "Opportunity" "Change you life" "Unlimited" (markets are always limited), , "perfect business for anyone" (in real marketplace companies don't want just "anyone" representing their business), "work your own schedule", "dreams" $$$

*The defenders are like men on a mission (you sense that religious vibe).

Here is the comment I left at TLS (not sure if it will get published):

How low can you go to post an advertisement for a company whose name is not even published only 4 months after you alerted your readership to The Harvest America bankruptcy? That "opportunity" like this "opportunity" share the same patterns and the same religious zealousness on the part of the defenders. The world is promised and little can be delivered because the model simply doesn't work. Stable, successful businesses to not seek to expand indiscriminately and indefinitely. They are not "perfect for anyone." They have officers, managers, owners who spend tremendous resources ensuring their company is staffed efficiently, not staffed by just anyone. They know markets are limited and they seek to target markets and create niche markets. These companies don't want everyone and anyone selling the same product. Quite the opposite in fact.

This is a stumbling block in front of the blind. In the spirit of Rosh Hashana (guarantees on parnassa!? I think not!), it would behoove you to remove this ad.

Resist Using Tragedy to Prompt a Agenda

Words cannot express the deep emotion that so many people feel for the Boro Park family who lost their sweet boy to pure evil. The emotions are shared by Americans nationwide and people throughout the world. The murder was so gruesome and unfathomable, and for those in the Jewish community, the pain is only compounded by the fact that the murder himself is one of us a member of the tribe.

I was surprised to see just how many Op-Ed's quickly surfaced, which is to be expected in the age of communication. But I really think it important to be careful, take a deep breath, take in the pain, and resist using this tragedy to play Navi or promote an agenda. We will never know the reason why Hashem allowed this boy's young life to be snuffed out and to insinuate reasons is incredibly presumptuous, perhaps even damaging when emotions run high. This is not to say that we should not be engaging in individual and communal introspection, each community and each man or woman examining.

I see little productive purpose in an organization coming in and drawing a correlation for the mourners of Israel (and attempting to raise money for their cause). This is an incredible and painful travesty, one for which we should be careful not to point fingers too quickly. And, furthermore (!) there are immediate pressing needs, particularly the important material and spiritual needs of the family in the present.

Now I'd like to say something about the third leg what is being promoted to "boost the kedusha" of Klal Yisael: tznius. (Note: I have no objection to tackling addictions or molestation or even tzniut issues). But, I believe the focus on tznius vis a vis one singular aspect (female dress) is extremely damaging. In this case, it is even more insidious. Mothers everywhere are taking a look at their parenting. They are trying to figure out where more supervision is needed and where freedom is age-appropriate. They are trying to figure out how much to supervise, how much to educate, how much to hover, how much to step back. . . . . are the talk being circulated tells women, mothers, girls that the goal is that we all have to "look invisible."

Let's resist using this horrific, horrific event to promote agendas. Let's step back, allow the emotions and logic to reach an equilibrium, and then perhaps publish editorials.

[Update: also see Rabbi Chaim B. of Divrei Chaim post "Crass" who is right to the point: "

I don't even want to discuss whether anyone can claim understanding of why Hashem would allow a child's life to be taken. To advertise in this way is not a philosophical or theological affront -- it is simply vulgar and crass. It's not a matter of a warped sense of Torah values, but a matter of a complete lack of derech eretz and common decency." Amen selah].

Two notes:

1. I'm turning on comment moderation for right now. Comment moderation has been turned off for now.

2. A note to a particular reader who will likely comment: while I do not normally engage in listening to these chizuk, tznius speeches, I have family that is very into this, so I'm not in the dark as to what these talks consist of.

Statement of Integrity, join the movement

A reader pointed out that the Ottawa Torah Institute and Machon Sarah have posted a Statement of Integrity on their webpage. The school is asking other schools to join them. This is a wonderful start to combating a near disease. Read on and encourage your school to join a movement to clarify issues of yashrut.

Statement of Integrity

To our great sadness, recent criminal convictions and ongoing prosecutions of individuals associating with or representing various Orthodox Jewish institutions (fortunately, none of them in Ottawa) have raised questions regarding core Torah values and beliefs. So that there should be no confusion, we feel we therefore have no choice but to make our views public and to formally distance ourselves from any such behaviour.

It is the position of the Ottawa Torah Institute that theft, fraud, money laundering, the abuse of government social programs or any similar crimes (including, Heaven forbid, crimes of violence) are plainly forbidden by Torah law no matter who stands to gain or who the victim may be.

We believe that Jews should have an especially deep sense of gratitude to the governments of the Western world - our own Canadian government in particular - for having provided us with a safe, prosperous and truly free home without parallel in all the centuries of our people's exile. We also share a very keen interest in preserving and enhancing the rule of law. Being the proud and grateful beneficiaries of our nation's just laws and their fair enforcement, it is unfathomable to us how anyone similarly blessed could spurn them.

We invite other like-minded Torah institutions to similarly make their beliefs known.Let us know if you do join in.

Read this particularly appropriate article, written decades ago by Rabbi Shimon Schwab of the Breuer's kehilla of Washington Heights, New York.

Have You No Shame?: Frum Peddler of MHA Writes and Writes

For (Orthonomic) background on MHA scam, see Lakewood Local.

This letter to The Lakewood Scoop regarding MHA is written by a loud and proud person who claims to be the first to introduce the program to the frum community. Wow! I'm blown away. Brazen is the only word I can think to describe this drivel.

This post is a continuation of a discussion of Get Rich Quick Schemes: see the previous post and a post from 2008. Add to this discussion of putting the cart before the horse. Also add to this discussion the many posts on Areivim "life insurance" because it all fits together in a larger discussion.

Here is a man that claims he brought big money into the frum community when he introduced and pedaled a product in the frum community, a "product" that wasn't actually a product after the grocery business was dropped and one that will reveal, with a simple Google Search, that there were quite a few questions on the business model, or lack thereof.

He is the tzadik and you just aren't hearing him out. Yep, I've dealt with those who lack integrity and I have a profile in my mind of how some people talk and walk. This might just be a letter, but the swagger and attitude is ever present. I can hear the letter and it is like deja vu. I can physically feel the letter in my bones.

Because the topics of yashrut and integrity are part and parcel of our being, and because I've been asked in the past about how to spot those who you don't want to do business with, I'm going to take the liberty to reprint parts of the letter for those who simply have yet to deal with someone like this because there is an educational purpose, even if this particular writer is sensational to the max. The emotions, the accusations, the self-promotion, the attitude. It is all there and it is sociopathic. (Note to self: pull a relevant find from Mishlei for the blog).

I have no idea if I have any readers are ones left holding the bag from MHA, but if you are, before you take the advise of this businessman purporting to be doing nothing but chessed, do yourself a favor and get legal advice before disputing charges on your credit card, i.e. taking his advice. The man cannot see straight.

It is so sad to see the comments coming in on this letters, comments such as:

"I think the Salesman was not intending to scam anyone..since the program was for 230 to get a 300 dollar card..if it lasted 5 months you are already ahead. I don’t think anyone truly thought this thing will last forever. Even now one can buy giftcards at 10-15% below face value..(big companies like Staples and Target sell them to get cash in bulk)." [My note: Put your gemorrah kop on. You simply can't compare big box stores selling prepaid gift cards for a discount to a company selling cash for cash. Staples and Target sell a product, not cash. It is to their benefit to gain your loyalty, peek your interest, and get you into their store to buy product.]

The question is to invest in a “window of opportunity” investment..where it makes sense until it doesn’t..if that is considered a scam. [My note: do you hear yourself?]

And this: "I dont know why so many people are beating up on you. I know you and you helped us out in a way that you thought we could all gain. And you helped us when it went down.

Fortunately there are just as many posters who do get it.

The letter:

. . . . . It’s amazing how so many people are mamesh mikayem naaseh vinishma when they blog. Why don’t you first find out the facts?

I was the first one to bring this to the frum world and I am happy I did. Since I did not listen to all the “its a scam” people, I got thousands of dollars into yiddishe hands. People who are have ordered their secure sleeves and expected to get a gift check (not CARD) can get back their money by disputing it with thier credit card. [deleted]

MHA was not a scam. No one got scammed. The ones who can not dispute, are those who made the purchase with a gift card. They will have to wait for the court to first collect all the assets of MHA and only then send in your claim. You will get a portion of the pie. (Not worth your time)

The “if its too good to be true, then it’s not true” people, could have been 5 – 10 thousand dollars richer by now. But alas “its too good to be true” so while you are wise and not naive, you remained wise and not naive but all the rest of us got money.

The “someone on the bottom will be left holding the bag” group of people, never took the time to understand that with this program you make money even if you don’t sign anyone up. They WILL be holding the bag, IF they don’t dispute it.

[. . . . . ]but I think it’s different when there is a credit card involved, because THEY are the ones who protect you.

“But lemaaseh Some people DID lose out, like the people who purchased with a gift card”. Good point, so let me ask you should have we decided not to pump in $150,000 into Yiddishe hands because someone might buy it the wrong way? Lets see what the coffee room says.

And for Mr. K who threatened to report me to the FBI and who threatened to publicize all my emails (in which I help everyone to make sure they dispute the charges properly). You’re mamesh a tzadik.

Finally I’ll say this. Besides for Mr. K (who was not even in MHA) I did not get even one accusing phone call. Every single person was so nice. Every one told me we know it’s not your fault and thank you for helping us with the information we need to retrieve our money.

I’m sure everyone who wrote things that are not so nice only did so because they were upset FOR those who may have lost money.

At the end of the day we still have each other and we each care for each other and this is what HKBH wants. Even my friend, Mr K. also meant well.

Wishing all my fellow brothers bracha vehatzlacha uparnassa b’revach.

And finally, I have a new thing which you could make thousands a month. It’ll cost you only $5. Pay ONCE. That’s it. Be careful, you might be “holding the bag”. Im serious.

[In comments further down in the thread the letter writer continues dig a hole, one that is really ugly. Might not be long until the pidyon campaign at this rate. See the lengthy comment #36 where he "lays it all out on the table" about how he didn't understand the business model but the men in charge have so much experience, how the business was ruined by consumers who called Walmart and later Wells Fargo souring the relationships, how consumers with funny names ruined a good thing, and on and on. Oy, a true believer who outlines a ponzi scheme, but has no integrity or clarity. And now he has another $5 opportunity for you to "invest" in if you are matzliach. . . an (illegal) chain letter with an attached product to kasher it].

And here is another jem from Mr. Parnassa:

I dont own the $5 business company. Ill send the link to those who are interested. And btw no one I know is out thousands. I just cant believe how people can talk without getting any facts. There is not one person i know who is out (so much) money.

We should all be tearing kriah. As reader JoelC says, "The comments on the Lakewood Scoop on this are heartbreaking. The mixture of naivete and brazenness make me lose hope for our brethren."

Time to promote the Tortoise over the Hare. Slow and steady is the way to "get rich."

Keeping a White Collar Clean (Full Text Article)

With thanks to Mishpacha Magazine and staff, I am able to bring my readers the entire article from Mishpacha.

Keeping a White Collar Clean

Investigations, prosecutions, and prison sentences for white-collar crimes in America have spiked significantly in recent years, leaving many members of the Orthodox community with the feeling that they are being singled out. Mishpacha questions financial experts to determine if this is fact or fantasy.

By Shimmy Blum

Last May, Assistant US Attorney General Lanny Breuer issued a not-so-veiled warning when he labeled our times “a new era of heightened white-collar crime enforcement — an era marked by increased resources, increased information sharing, increased cooperation and coordination, and tough penalties for corporations and individuals alike.”

Since the 1990s, when white-collar crimes took a backseat to violent crime, the former’s prominence in the eyes of law enforcement officials has risen dramatically.

Early in the last decade, after the passage of the Sarbanes-Oxley Act, federal sentencing guidelines were changed to increase jail terms for white-collar criminals. Statistics show that between 1995 and 2008, the average sentence for a federal white-collar crime rose from 18 to 28 months.

“Judges are no longer handing down six-month sentences for these crimes; they’re far harsher that they were even five years ago,” says Chaim H. Leshkowitz, senior partner in the Leshkowitz and Company accounting firm, as well as an attorney specializing in tax and other financial matters. “The criminal justice system is sick and tired of what it sees as white-collar criminals gaining an unfair advantage over law-abiding citizens.”

The frum community’s awareness of the serious consequences of white-collar crime has been significantly heightened in recent years, due in part to several high-profile investigations and even convictions of frum individuals. “I recently visited the prison in Otisville, New York [where there are a number of frum inmates] and the situation is very sad,” says Mr. Leshkowitz. “I saw several people incarcerated there for relatively minor fraud convictions.”

Despite the attention that the investigations and the resulting media coverage have brought to our communities , Mr. Leshkowitz states his unequivocal belief that the law-enforcement officials don’t profile or discriminate against particular communities, and do treat his clients of all ethnicities equally.

Prominent defense attorney and former prosecutor Jacob Laufer concurs, but notes that even the fact that frum Jews attract equal suspicion and treatment under the law represents a stark decline in their image in the eyes of the law-enforcement community. “Years back,” he relates, “if an agent felt the need to question a Yid with a beard and peyos, he’d almost apologetically ask, ‘Rabbi, can you please explain to us this transaction? We’re having some difficulty understanding it.’ This sense of deference no longer exists.”

Legal experts warn that although our community is treated fairly, its members should be especially vigilant in their financial transactions because there are several factors that can unwittingly draw greater scrutiny to frum individuals and institutions.

No More Secrets

Mr. Leshkowitz observes that some actions common within frum communities can raise red flags for the IRS and other agencies, despite the absence of criminal intent or actual illegality.

One major issue is overseas bank accounts in cases where the account holders failed to report their existence to the IRS and pay the necessary taxes.

The IRS has aggressively pursued information from foreign banks in recent years and has offered two amnesty programs for taxpayers who divulge the existence of such assets and pay the necessary back taxes and any penalties owed. Criminal charges could be potentially filed against those who do not, and the eventual fines could even exceed the value of the account. “Some Jews, particularly Holocaust survivors, sought to keep secret money overseas for reasons completely unrelated to taxes,” says Mr. Leshkowitz. “They saw that out-of-the-country money saved some Yidden during the Holocaust, and wanted to have some funds to rely on in case of another Holocaust, chas v’shalom.”

Another IRS enforcement tactic that can impact the frum community harder than others is the periodic targeting of certain types of entities for additional review. After being made aware of cases of abuse by nonprofit organizations, similar institutions may be targeted. With its high concentration of such entities, the frum community often bears a disproportionate brunt of this scrutiny.

Additionally, government officials often randomly scrutinize certain industries that are rife with fraud. These can include cash businesses and mortgage companies — two areas in which frum Jews work in large numbers. In light of the subprime mortgage crisis and the ensuing collapse of the financial system, Mr. Leshkowitz noted that mortgage brokers and homeowners are being closely examined for potential mortgage application fraud, even in cases where the homeowners are keeping up their monthly payments. High tax deductions for charity or other expenses will also be seen as “deviations” by IRS computers and agents, triggering enhanced scrutiny.

Parental support for couples is another phenomenon common in the frum community. An IRS agent would likely be suspicious when encountering a midsize family that owns a home and cars and reports little or no income. Similarly, legitimate, large — and interest-free — gemach (free-loan society) loans to individuals with paltry income, assets, and credit may seem dubious to those not fully familiar with the inner workings and culture of frum communities, where trust between its members often trumps the traditional documentation and collateral used to secure loans in society at large.

In contrast, HSBC Bank subsidiaries HFC and Beneficial loans, the decades-old stalwarts who lent to those with poor credit and collateral, have been the targets of many lawsuits alleging that they charged exorbitant interest.

Tattletale Gray

In addition to the risk of random scrutiny of businesses and individuals, scrutiny of particular individuals, businesses, or nonprofit entities typically result from specific information that government officials have received from other sources.

“Many people are unaware of what information gets passed on to the government, and some have gotten jail time as a result,” Mr. Leshkowitz says.

Under the terms of the Bank Secrecy Act of 1970, banks and other financial institutions are expected to report potentially illegal transactions to the authorities, including the filing of suspicious activity reports (SAR). In most cases, the law forbids the institution to inform the customer that a report has been filed.

Deposits, cash withdrawals, and cashing of checks of $10,000 or more are usually reported by banks, including when large sums appear to be “structured” in multiple smaller transactions to mask their true scope. Bank employees are also trained to report smaller transactions that they consider to be suspicious.

Money services such as check cashers are required to record and report all transactions over $10,000, as well as transactions of $2,000 and up, which they suspect are being done to evade taxes or facilitate another illegal activity. The cashing of business checks at these venues, in particular, is commonly reported to government agencies.

Likewise, individuals, banks, brokerage firms, and all other businesses are required to file W2s or 1099 forms with the IRS, informing them of monies dispensed to an individual that may cause the recipient a tax liability, including for random freelance work. Though the recipient typically receives a copy of the forms sent to the IRS before he files his tax return, he is held liable if he doesn’t report this income, even if the issuer had only sent a copy to the IRS and not to him. Mr. Leshkowitz relates that it is relatively common for those involved in real estate transactions, for instance, not to be aware that the IRS was informed of the proceeds of the sale. Sellers should always ensure that they have clarity from their lawyers as to when a property sale may trigger a taxable event.

Additionally, information regarding questionable activities can also be relayed to government officials by people under investigation who are seeking to plea-bargain, or by spiteful spouses or bitter business partners. These phenomena are more common within our communities than many of us would like to believe.

Government investigations also frequently ensue as a direct result of investigations into other, unrelated parties. For instance, if agents audit one business, they can review all the payments that the business made to individuals and other businesses and match the information with the recipients’ tax returns.

This “domino effect,” says Mr. Laufer, can have an overwhelming effect on frum communities. “Members of frum communities tend to be interconnected,” he explains. “When one person is being investigated for illegal activities, it puts everyone who had any financial interactions with him, or even once deposited a check in the same account, on the radar screen. In most cases, the other individuals now being investigated hail from the same community.”

A Pound of Prevention

Legal experts stress the importance of avoiding even the slightest breach of the law as the surest means of protecting oneself from investigations and potentially devastating consequences. There is no better protection than having nothing to hide if the authorities do, for whatever reason, ring you up. “When you’re the unlucky one who is caught and you’re standing before a sentencing judge, the ‘Everybody does it’ defense gets you nowhere,” says Mr. Leshkowitz. His best advice is that people questioned by the IRS or other law enforcement agencies should never represent themselves, even when dealing with seemingly innocuous issues. “It is critically important to have an articulate, competent professional represent you in any information exchange with the authorities. You need someone who knows all the potential pitfalls and can satisfactorily explain the situation.”

Mr. Laufer contends that this vigilance is part and parcel of who we are. “When you wear the ‘uniform’ of a frum Yid,” he says, “you’re seen as representing certain principles. If you simply follow the Torah’s commands, which prohibit lying, stealing, even geneivas daas deception, you stay out of trouble.”

Mishpacha: Keeping a White Collar Clean

I am very thankful to those who are the eyes and ears of this blog and a special thank you to reader rosie. Mishpacha has run an article in the recent edition titled Keeping a White Collar Clean. I need to get my hands on a copy of the magazine and plan to buy a copy later this week so I can write some though. Rosie summed up some of the reasons below (underlined) and I am very grateful for the summary as the information is enhancing from a professional standpoint. Below the summarized reasons, I've put some of my own notes and hopefully this post will serve as a reminder to me to get on the ball and take some time to write about some tax and personal finances topics that I've wanted to write about but need to clarify my thoughts in order to share valuable information.

1. Foreign bank accounts and not paying taxes on them.

Foreign bank accounts are a hot tax topic lately. In the past, such accounts were often ignored and in 2004 the government enacted a penalty for those who did not report foreign accounts--owned or signature authority--totaling $10,000 or more during the calendar year. More requirements on the FBAR are available at the IRS website. I'm not an expert on FBAR reporting requirements, nor do I have any foreign accounts of my own or intentions of opening foreign accounts.

The bottom line is that all income, no matter where it is sourced, must be claimed on the 1040 (in converted American dollars). Failure to claim the income can open the door to taking credits that the taxpayer is not eligible for. Foreign income can be excluded under certain circumstances (form 2555 or 2555EZ) or a tax credit can be claimed for foreign tax paid.

2. Business that often commit fraud such as the mortgage business.

3. Due to parental support, people with homes and cars get IRS attention because they claim no income.

It is important to understand that audits are mostly triggered based on ratios. When the "numbers don't add up" it arouses suspicion. People can't be spending all their money on mortgages, business expenses, medical expenses, etc. They still need to eat and wear clothing.

Excessive itemized deductions in comparison to income is a red flag, especially for years on end. I found a reference to the ratios through a firm: for itemized deductions 45% is the ratio and for Schedule C (business income or loss), expenses exceeding 60% of income is the trigger. Mortgage interest, taxes (real estate and state income taxes), and charitable donations are the big three itemized deductions. I checked our ratios and was please to be well under the audit trigger for both schedules.

I once had a Shabbat lunch with someone whose ratios had triggered an audit and the IRS examiner asked him "what do you live on?" I don't think "G-d provides" is the answer the auditor wants to hear. So if your ratios are excessive, it makes sense to have an answer. When my parent's tax return was flagged for audit, they were able to sufficiently explain to the examiner the market trend and never had to undergo the arduous process of a full blown audit as the explanation was reasonable and easily verifiable.

4. Larger than average charitable contribution deductions getting IRS attention.

I believe the IRS tracks average charitable deductions by taxpayer income. I recall reading somewhere that the average American donations between 3 and 5% of AGI (adjusted gross income). Exceeding the average is fine, but donations need to be well documented. In recent years documentation requirements have tightened. All cash donations need a receipt. A letter stating no goods or services received is required should a donation be $250 or greater. Cancelled checks or credit card receipts will suffice for donations under $250.

5. Money borrowed from gemachs that allows people to live with more than they make but attracting the attention of the IRS.

This clearly plays into the discussion of ratios above. I'd like to learn more about all of these money gemachs I keep hearing about. Out of town, we tend towards lending gemachs: simcha wear, children's clothing, baby equipment, and the like. An issue I can see arising should an auditor be presented with a bank register and out of wack numbers would be if the loans are really income, rather than loans and/or tzedakah (see the domino effect, #8 below).

6. Large checks over $10,000 hitting the banks or smaller checks that follow a pattern, alerting the government.

7. Jews incriminating other Jews during plea bargains or because they are involved in business or divorce disputes.

8. The domino effect when one fraudulent businessman is investigated and those who did business with him are investigated as well.

Tzedek, Tzedek Tirdof: Yes You Should Take Action

Some injustices simply can't be ignored and I'd say this is one of them (see post at imamother, no responses have come in but I think the responses will be interesting). While I tend to let certain things slide when it is my own cheshbon, I feel strongly that when it comes to our children, certain injustices cannot stand and non-payment (or re-negotiated, after the fact partial payment) is one such thing.

As adults, many of us will have to deal with people that are less than yashar and we might choose to certain things slide, oftentimes because we make a calculation that it will cost us more (emotionally, financially, politically, etc) to pursue action. But I believe that as a general rule, I'd say our children need to see that their parents are willing to do whatever it takes to pursue what is right so that 1) our children understand that certain (unfortunately fairly common things) are simply wrong and 2) for the sake of our children's relationship to Torah and Am Yisrael as all of the mi kamocha-lectures cannot undo the damage.

My long time readers might remember a post I wrote based on the chinuch column in the Yated regarding a teacher's accusation that a student asking for payment for babysitting (the next day!) was a form of chutzpah. I find it shameful that children are being brought into shameful cat-and-mouse games of non-payment/late payment that too many adults play. But children? While leadership worries about the internet eroding chinuch (and they have a point!), I'm afraid the initial erosion is in an ethic that is mostly ignored.

I'm certain that pursuing that extra $500 (assuming the first $500 is delivered) is probably a losing proposal should another simple phone call not do the trick. Going to a din Torah over $500 is likely to end up putting the family in the red vis a vis this transaction in the aggregate, although I'm not certain what din Torah fees run (. . . . just basing my assumption on what it cost my friend to have a beit din sit for 1/2 an hour for a get). I hope that if such a thing were to happen to my own children, I would fight tooth and nail to pursue what is owed to them although monetarily it is likely a losing proposal.

Goodluck to the parents and I hope that those that they may have to call as witnesses will understand that this is no time to "turn the other cheek" (a Chrisitian concept that I believe is the opposite of tzedek, tzedek tirdof).

Yated: A Change of Heart?

I haven't picked up a Yated in what seems like ages. Matzav publishes their weekly editorial, however. And while I rarely read it, this one caught my eye. I must say that I'm completely perplexed by the recent editorial "Life is Not a Popularity Contest" in which the newspaper's editor, in a rather long-winded editorial, ponders the propriety ignoring the "unsavory" in our midst.

Below are some select quotes from the article and I can't help but wondering, what prompted this editorial? This from the publication that did not once mention [insert story].

What is going on here? I'm hopeful that there is something positive going on behind the scenes and that honor and integrity will take a front seat.

The portrayals are far from flattering and thrust us into a dilemma. Do we ignore the unsavory stories or do we report on them? Do we publicly dissociate ourselves from individuals who have brazenly betrayed Torah ideals but continue to claim to represent our community?

How do we deal with the problem of people in our community who engage in dishonorable conduct? By ignoring it and by remaining silent, we are communicating a message that we tolerate and even condone the conduct. Is that the message we want to send?

We need to assess what we are doing wrong so that we can halt a pernicious trend and improve our people, their future, and the way we are being perceived by the world around us.

We also need to distance ourselves, publicly and privately, from people whom we know to be engaging in improper conduct and giving us all a black eye. There are prominent people who speak in the name of our community, whom we are quick to criticize and disown when speaking among close friends, but whom, for some reason, we never condemn publicly.

The media and bloggers have a field day painting these miscreants as representative of all religious Jews and rabbis. While many of them are motivated by pure hatred, how can we condemn them, as long as we continue to convey the impression through our silence that we are all of one stripe? If we do not disavow them, how can we expect the media and people removed from our community to differentiate between us?

Perhaps we remain silent out of fear. The notion that these people are arrogant and vindictive and will come after us is intimidating. Also, no one wants to be seen as a troublemaker. It can ruin our children’s prospects for shidduchim if we engage in activities which would allow unscrupulous people to paint us as baalei machlokes. People will say that we are negative, cynical, obstinate and arrogant. So we sit off to the side and permit these frauds to parade as Orthodox Jews in good standing.

Prominent shady characters are given carte blanche to enact their agendas and the dishonest are permitted to continue their detrimental behavior and actions. We beat gingerly around the bush, dancing around the edges, afraid to proclaim the truth.

What are we afraid of? Why are we silent? How can we live with ourselves as we see yet another rabbi or religious Jew creating yet another chillul Hashem? It would be bad enough if we waited until the scandal hit the papers and only then took corrective steps, but we haven’t mustered the courage to do even that.

We are beset by so many problems in our community, but if we are prevented from honestly assessing and addressing them, we will not be able to solve them. As any edifice built on a shaky foundation cannot endure over time, an ideological house of cards built on illusions will not survive. Closing our eyes to the facts won’t change them and will not remove the rot at the core.

Dealing with superficial issues which are merely symptoms of the malady while failing to invest time and energy in remedying the underlying causes is as effective as slapping a band-aid over gaping wounds.

Policies that Foster a Lack of Yashrut

In the past I noted that other private schools offer a financial aid package before parents sign a tuition contract. These schools also tend to collect tuition for the school year up front, or in 2-3 deposits, rather than monthly. Parents know what is expected and the business office likely doesn't expect to play a monthly cat and mouse game because tuition payments are mostly in the bank.

The general practice in our own day schools and yeshivot is to enroll students before the details of price are worked out, then work out a price, and after that engage in a monthly collections process. A friend of mine was encouraged to enroll her child in a school on the statement of a board member that they would very possibly be eligible for a tuition reduction (final decisions to be made in June, never mind that early enrollment took place mid-February). But without a guarantee, they weren't comfortable.

Another friend pointed out to me that their school asks all parents to sign a regular--i.e. full price--tuition contract prior to the financial aid decisions. The school has a reputation of being "flexible" but I find such a process incredibly problematic.

Pardon me for not being fully inculcated into the day school/yeshiva world, but the idea of working out the details **after** signing a contract is simply incomprehensible to me. More incomprehensible to me is why a school would ask parents to sign something knowing that a good 50-75% of parents are not going to pay that rate. The contract isn't worth the paper it is written on in such a case. If you want parents to take their obligation seriously, you have to have a serious process, one that fosters seriousness and yirat shomayim. I simply don't understand this method of operating. And I probably never will.

Bribery and Recruitment for Israeli Gap Year Yeshivot

If the Jewish world had it's own NCAA, some yeshiva might be looking at sanctions. Recently, one of my readers pointed me to a thread on Lookjed forum in which the Principal of CHAT (Toronto) shared that a well-known Yeshiva in Israel bribed him by offering $1000 cash for each student he could steer their way.

Quite frankly, I'm not sure why the Rabbi has chosen to omit the name of the Yeshiva. The good news is that in each forum, there is no gray area amongst the educators on Lookjed about the ethical breach. Without exception, all who commented on the Lookjed thread and in the Jewish Week article are horrified, saddened, shocked, etc and many offer concrete suggestions as to how to improve the recruitment process, as well as stories from the past regarding what they see as inappropriate behavior in the recruitment process.

Despite the ethical breach, I feel positive that this recruitment "technique" will be rejected.

Wasn't Even Going to Comment, but this makes for an interesting break

I wasn't even going to bother with the newest fraud case, this time brought to us by a crime ring in Israel that has been producing false ID cards and records for non-existent students to increase funding for certain yeshivot/kollelim by submitting false reports to the Education . Reports are stating that there are three non-profits involved and another 40 other co-conspirator establishments. Fraud has ceased to surprise me, and I didn't even bat an eye when scrolling through the frum news, until the latest installment of this newest case.

Given my professional and educational background, one thing I've learned along the way is the fraud isn't something that easily surfaces. Breaking a fraud case must often be accompanied by a great tip, hence vehicles such as anonymous fraud tip hotlines. And, here, the tip won't disappoint.

The "moser" that tipped off Israeli authorities is none other than our favorite friend, the Neturei Karta. As per reports, when members of this sect discovered their names were being used to illegally receive stipends from the Israeli government, they tipped off law enforcement and law enforcement began to monitor the illegal activity resulting in a raid and arrests.

I know I should only feel shame when yet another fraud scheme involving "observant" Jews who stand for "Torah" comes to light, but it is hard for me not to at least a slight bit, uh, excited about the tip that has brought yet another crime ring to face the music. Hashem certainly has a sense of humor.

Ben Ish Hai re: Gambling Issues

Continuing with some interesting passages from the Ben Ish Hai's instruction guide to women (translated from Arabic to English). Full disclosure: my children enjoy basic card games, checkers, and backgammon.

In the past, on this blog, I have put out my own theory that certain types of fundraisers, in the name of tzedakah mind you, could possibly tempt people to "give" more than is prudent because they have a proclivity towards gambling. It is nice to see I'm not barking up my own tree on this issue. For whatever reason, the Ben Ish Hai only seems to address mothers keeping their daughters from such games, yet addresses what such games do to "him", although the conclusion is that none are to play such games. Issues of tzniut are only addressed secondly.

Ben Ish Hai on "Innocent Games"

A mother should prohibit her daughter from participating in card games, checkers, backgammon, and other such games. These games cause people to become compulsive players. This obsessive attraction for the game eventually takes its toll on the person 0 he becomes increasingly disinterested in other aspects of his life, such as his means of earning a living and his relationships with people. In order to support his habit, the compulsive player resorts to theft and fraud, as well as other illegitimate means of earning a living. Thus, a mother would do well to keep her daughter away from such games.

Furthermore, these games usually evoke an atmosphere of lewdness and frivolity. When men and women play these games together, the Evil Inclination dances between them and arouses their desires. Many men have lost their money in such games, and, unfortunately, many women their repute. In Bagdad, there have been reports of many wealthy people losing their entire fortunes as a result of their obsession to these games. For this reason, there is a decree prohibiting anyone, both men and women, from playing them.

[Passage continues with resisting the temptation to play even once]

Please Quit Your Job

Whenever I hear about an Yeshiva employee who has not been paid, it upsets me greatly and breaks my heart. But, I also wish that Yeshiva teachers would stop allowing themselves to be abused. I don't think that they are doing anyone a favor by sticking around and allowing something so anti-Torah to perpetuate itself. They certainly aren't doing themselves a favor by staying in a position that doesn't pay while other opportunities are not pursued. They certainly aren't doing their families a favor as they fall behind financially. And I'm going to even insist that they aren't doing the schools and those that they serve a favor by allowing an unjust system to continue to prevail. Please, when you aren't being paid and it becomes quite obvious it is a lost cause. . . . quit and seek work elsewhere. Perhaps only at that point will the community be forced to come together and actually solve this problem by creating a "system" that actually functions. From this week's Yated:



Haven't Been Paid in Months

Dear Editor,

I read the letter regarding the tuition crisis [I believe this is the letter] and let out a very big sigh. As a parent, you may feel that the bill is huge, but please see the other side of the coin. I am a wife of a very hardworking rebbi who is owed $17,350 in salary. If parents don't pay their bills, their children will suffer. Rabbeim who don't get paid become stressed out. Streed rabbeim don't have savlanus to deal with tough kids. So please pay your bill.



Sincerely,
A Rebbi's wife


It is time to do what needs to be done.

Guest Post: More About “The Plan”

Thank you to Dr. Lasson, the author of the newest Guest Post on the subject of employment. This is another truly excellent article on employment issues with a lot of great points for consideration. I can personally relate to one of the later points in the article on how we, as Orthodox Jews, all reflect on each other (so, make a good impression for your brother's sake!). Lost of great information form my readers. Enjoy!

Reprinted with permission from the Where What When magazine
by Elly D. Lasson, Ph.D.

In his “Do You Have a Plan?” article (May, 2010), Stuart Hoffman makes several important points. I would like to add several of my own based on my ongoing experience with employers, recruiters, and job seekers.

It goes without saying that parents need to play a more active role in The Plan, interfacing with the undergraduate and graduate programs directly and being an informed consumer prior to their investment on behalf of their sons or daughters. Questions might include, what is the track record for the graduates of a given program? Have graduates been able to find a broad range of viable jobs in the corporate world, or are one’s prospects limited to the Orthodox community, in which quality jobs are scarce?

The time for parents to start thinking about The Plan is probably 10th or 11th grade, as decisions or non-decisions made in 12th grade will have important ramifications for the future. Parents should maintain an ongoing dialogue with their children about The Plan, and take practical steps towards it over the next several years. Deferring these conversations and steps will likely have significant consequences down the road. Obviously, some variables will change, but many are very predictable. I have met with many people who, in retrospect, never had a realistic plan yet now wish that they had. Many of them have not been able to break into or gain traction within the job market. While this has certainly been exacerbated in the current economy, it is not a recent phenomenon.

When seeking out a career path or plan, it is best not to anticipate being the exception to the rule. While some people have landed in a particular successful employment situation after an untraditional path, that approach is by definition rarely effective. Consulting with people who have “been there done that” is worthwhile. The concept of an “informational interview” is salient here. An informational interview is a meeting with a key (potential) mentor at his or her place of employment to learn about the field, the organization, and the workplace. Such an interview will hopefully serve as a realistic preview of both the positives and the challenges of that field. The timing of such a meeting should be early enough in one’s life to allow The Plan to crystallize.

Many individuals in our community are interested in financial services or federal government employment. People should realize that within the federal and even the private sector, employers will often conduct credit or other background checks (beyond a perfunctory “reference check”) prior to employment. Your credit score, which is an index of your financial stability, might also be researched. It is within their right to do so, if protocols are followed as per the Fair Credit Reporting Act. So, please be aware that a problematic financial history can have serious employment ramifications, not only for “security sensitive” positions but others as well. In addition, those with significant debt, including maintaining high credit card balances, might very well be disqualified for these jobs. Therefore, before you start applying for these employment opportunities, it is critical to make sure that your credit history does not contain errors or delinquencies; anything of this nature should be corrected or resolved. It goes without saying that one’s financial history cannot include anything illegal or unethical.

Even if a boy is cut-out for a full-day learning program and is successful in yeshiva, that might only be appropriate in the short term. For most people, there needs to be a cheshbon, or plan, towards an eventual “exit strategy.” This strategy should be considered early on. The objective should be to obtain credentials that will match not only one’s acumen and interests but will also be recognized by a broad range of employers in a competitive job market.

The following are some historical trends that I and others have observed:

1) For the most part, during the 20th century, white-collar jobs were relatively stable and predictable, especially in traditional fields like law, accounting, business/entrepreneurship, and medicine. Things were stable and did not change much; change if any, was slow.

2) At the end of the 20th century and the first decade of the 21st, advances in technology and science have drastically changed the landscape of the workplace. This has created new challenges of supply and demand within the labor market. Some jobs have been specialized. Some have become obsolete. Some have been outsourced overseas. Therefore, the number of available jobs, especially within a restricted geographic area, has shrunk. The common denominator is that things are constantly changing and people have to keep up.

3) From 2008 to 2010, an economic reality has hit, creating additional changes in the labor market and where jobs can be found. For people to continue to hang on to the first point above, without a full appreciation of the second, is counterproductive and amounts to burying one’s head in the sand.

The take-away lesson here is that trends are pointing in different directions, certainly other than the professions mentioned in point number one. The reality is that there is now a glut of attorneys, accountants, and MBAs who are seeking employment in fields with a limited number of openings. Those who are passionate and motivated in traditional occupations such as accounting, law, etc., may still want to consider those fields, as long as they take point number two into consideration and make conscious decisions accordingly. They should not rely on the job market of yesteryear or go into these fields because that is what everyone else is doing.

People should read publications such as the Wall Street Journal and the Baltimore Business Journal to be conversant with market trends. Also, they should speak with people in the field, both Orthodox and not, those who are experienced as well as those who are early-career. The laws of labor supply-and-demand are in play today more than ever.

There is another significant issue, which relates to using the “streamlined” undergraduate degrees as a means of gaining admission to some sort of graduate program. In a traditional bachelor’s degree program, there is an opportunity for exploration and trial-and-error, allowing the student to make adjustments or switch tracks. That is not the case with streamlined programs, especially if the degree obtained is not accompanied by work experience. Therefore, one must be relatively certain about the track to be taken. It should be one in which he or she has the ability to do the coursework and complete the program, is passionate about the field with healthy ambition, and is capable of being successful in that discipline. Going down a vocational path simply because it is in vogue, or because it is perceived at being easy, might ultimately result in a bad fit.

I would like to clarify some points about transferring credits. Not all colleges will accept credits earned for college courses taken off campus during high school or beyond. This is an empirical question, which parents should find out ahead of time by consulting with the prospective college Admissions Office directly. In addition, there is a subtle difference between a college accepting a course as a prerequisite for other courses or merely counting those earned credits towards the grand total required.

The tone of this article is not to be critical of any local institution. However, there have been observable deficits recently within our community in terms of skills related to written English, math, and science. There is a tendency of parents to minimize the importance of these areas at the junior and high school levels, with the assumption that somehow, one’s son or daughter will eventually pick it up and do fine in post-high school classes and the workplace.

Well, that is not happening. We are seeing the ramifications of this trend in terms of many young people not being competitive in today’s job market. Make no mistake: This trend is independent of the current economy. Parents should come to expect an improvement in these areas from the schools. Otherwise, they will find themselves disappointed down the line when their children have challenges finding employment.

“Soft” skills critical to success in any field of endeavor include proper social and communication skills as well as professionalism. Simple things such as returning phone calls in a prompt fashion, being polite and not overbearing, having the appropriate balance of self-confidence and humility, and following up appropriately, are to some extent lacking. In our era of email technology, communicating properly and promptly through that channel is also part of this equation. In addition, offering oneself as a team player, both verbally and in action, is a sought-after quality in demonstrating work readiness; in a tight job market, it is a requirement. These are basic prerequisites, the importance of which should not be overlooked.

If a young man or woman is open to various fields, it should be noted that the growth fields today include engineering, technology, science, and biotech. The predicted influx of jobs to this area as a result of the Base Realignment and Closing (BRAC), the U.S. Cyber Command, and a Federal Data Center will be primarily those in technology and engineering. Yes, it is true that the schooling for these fields might take a bit longer. But, in the long run, the person will be better off by obtaining credentials in which there are a greater number of potential job opportunities. People should realize this and seek channels through which to obtain industry-recognized training and experience.

Within Information Technology (IT), the “hot commodities” we are seeing in the job market are Java, Sharepoint, C++, PHP, .Net, and programming for mobile devices (see below). These skills are very specific and may not even be taught through traditional training courses. They are often picked up on the job, which makes job experience particularly salient. For some, a bachelor’s degree in Computer Science or Information Systems is required or advantageous. However, industry-recognized certifications do not require a degree and can be administered through companies like Microsoft or Cisco. Locally, degree and non-degree certification programs are offered at Towson, UMBC, CCBC, and Hopkins, as well as private career institutes.
Project Management within these technical areas is another viable specialty. However, it requires existing experience and the industry-standard PMP (Project Management Professional) certification. Program and Project Managers with the PMP, ITIL (and other related) certifications are in demand. The PMP certification is frequently what raises a particular individual to the top of lists, and many firms are seeking those with PMP certification. Regardless of industry or client segment focus, recruiters look favorably at this credential.

One last point is worth emphasizing when it comes to working together with others who are not like us. The truth is that we are representatives of not only Jews but of Orthodox Jews as well. A relatively recent phenomenon includes employees requesting time off or scheduling adjustments for discretionary reasons, such as personal or family events that are not linked to an absolute religious necessity. I am also aware of situations in which frum employees have maintained excessive degrees of professional separation in the workplace, which may very well convey the perception of not wanting to be a team player.

When employment relationships don’t work out for these reasons, both non-Orthodox and Orthodox employers might be hesitant to consider or hire another (often easily identifiable) frum employee in the future. In addition, a current Orthodox employee might be reluctant to “go to bat” in referring a frum job seeker to his or her organization out of concerns of it reflecting poorly on him or herself. So, a chilul Hashem might also have negative practical consequences for our community. Conversely, working effectively with colleagues and working hard for an organization can facilitate a kiddush Hashem, not to mention create the perception that Orthodox Jews, while principled, are decent and productive people.

Let me conclude with the following empirical information for review. While there are and will be jobs available in other fields of endeavor, this list shows the current trend towards the technical sector. (See sidebar for top-paying degrees.) Based on a recent informal survey which I sent to technical recruiters, the following are in-demand skills and credentials:

Specific Technologies, Environments, or Systems: Proficiency with Microsoft software (Office applications, the various Windows Operating Systems such as 7, XP, Server 2000); Sys Admin/Net Management tools (Microsoft, HP, Cisco); Sun/Solaris; UNIX/Linux; SQL Database development/other DB dev tools (such as Sybase and Oracle).
For accounting, Deltek, MAS90, other tools with Payroll and time tracking modules. The hottest accounting-related skill in this region right now is EVM (Earned Value Management).

Programming Languages or Software Programs: MS Visual Studio suite, other object oriented languages, such as C++, Java, .Net, J2EE, and Web development tools.

Training: College degrees, undergraduate or graduate, or other credential, such as an Associate’s degree or Bachelor of Science in Information Systems and Computer Science.

Industry Recognized Certifications: A+ (CompTIA), PMP, ITIL, Cisco, MS Office, MSCE, MSP(s), MCSD, HDI/HMI (Help Desk Institute).

Elly D. Lasson, Ph.D., is Executive Director of Joblink of Maryland.

[Sidebar] Top-Paying Bachelor's Degrees
(Source: Winter 2010 Salary Survey, National Association of Colleges and Employers)
* Data represent offers to bachelor’s degree candidates where 10 or more offers were reported.
Major Average Salary Offer*
Petroleum Engineering $86,220
Chemical Engineering $65,142
Mining & Mineral Engineering (incl. geological) $64,552
Computer Science $61,205
Computer Engineering $60,879
Electrical/Electronics & Communications Engineering $59,074
Mechanical Engineering $58,392
Industrial/Manufacturing Engineering $57,734
Aerospace/Aeronautical/Astronautical Engineering $57,231
Information Sciences & Systems $54,038

How to Stop the Cat and Mouse Game

Hat Tips: Google Alerts

Over at Dov Bear this past week appeared a back and forth between Jennifer in Mamaland and a Yeshiva Administrator, and a Tuition Wrap Up by Dov Bear. In short, Jennifer in Mamaland hates the tuition assistance dance of gathering numerous papers, disclosing every detail in detail, and begging for a reduced rate. She'd prefer a "short form". The responding Yeshiva Administrator doesn't like the dance he has to do to get parents to pay up the money that they agreed to pay in their tuition contract. And Dov Bear is calling for Yeshivot to run themselves more professionally and take collections seriously.

It sure would be lovely to have an honor system and one would think that when you are dealing with a Torah observant crowd, you could rely on an honor system. But unfortunately that was not the case when my husband was in elementary (his father occassionally did some research for the mechanech), nor is it the case today. Case in point would be a recent suggestion from one imamother member to another on how to keep the kids out of public school (which the mother was contemplating after her school closed down this summer) when the money for tuition simply isn't there:

Anyways, I say fight the fight and make sure they stay in torah schools. Tell the schools that your trying to get into that you are getting money from a relative-- make something up, and youll be able to pay in..october.. and then october comes and tell them you dont have it and pay what you can...they can't kick you out- can they? Iknow in new york they are really snobby and its sad. Where I lived, you pay what you could but with one or two schools in the community, they had no choice but to accept you either way. But I just wanna say that eduacting your kids to be religious, Gd fearing Jews should be number one priority for all of us. So I would do whatever I could to send them to Torah Schools. [sic]

Ah, lies, deception, and outright theft: The foundation on which to raise a "Gd fearing Jew." There is no question in my mind that Yeshiva administrators have their plate full when it comes to administering a scholarship system in a way that maintains dignity while trying to maintain some fiduciary duty.

So, the cat and mouse game is nothing new and because it is nothing new, I'd like to present an idea that is sure to be controversial with a capital C-O-N-T-R-O-V-E-R-S-I-A-L. Controversial as the following suggestions might be, they are industry standard practice and should be considered for their merit as the billing and collection games are simply ridiculous (and, yes, I've had a bit of an opportunity to witness this song and dance from the inside. Getting the billing and collections game under control would go a long way towards creating financially stable programming. Additionally, these practices will allow yeshivas (and camps) to create real, usable budgets which allow staff and bills to be paid on time, every time. The budget need not be a guessing game (and you can shave numerous staff hours in the process) when you know just just about how much money you have to work with because:

1. The school has collected most of the money before the first day of school (and builds in a premium for money they will collect later, offsetting possible bad debts).

In my research of private schools, I've noted that industry standard for private schools (especially pricier private schools) is to collect tuition in large lump sums. Ideally a school collects 100% of tuition due before the start of the school year, on August 1st. Different arrangements prevail for those who cannot pay in one lump sum, and extra fees are attached for parents who do not pay in one lump sum. I don't know if charging extra fees is halachically permissible, but I have seen some Yeshiva schools do so also. Some schools collect tuition in 3 larger lump sum payments, some in two. Collections are generally done well before the end of the year.


Now I realize that going to a one lump sum payment won't be popular for a number of reasons (and instituting lump sum payment plan(s), rather than a lump sum payment plan must be accompanied by a trust relationship), but it seems to me that if most tuition was collected before the start of the school year, schools could mostly end this cat and mouse game of collections. Furthermore, schools would basically know how much they have to work with and could plan accordingly.


Obviously, such a plan would be unpractical for parents currently in the system who are living month-to-month, but instituting such a plan for 1st time yeshiva parents is well worth considering in my opinion.


2. Tuition assistance decisions were made before school contracts for the coming school year are signed.

This also appears to be standard industry practice for schools that offer tuition assistance, as most private schools do. The admissions process works as such:

• Students apply for the following school year during late December, early January.
  
• Students applying for financial aid complete tuition assistance forms in addition to admissions forms.


• Schools send out letters of commitment and tuition contracts.


• Parents and students return letters of commitment, signed tuition contracts (and choose their payment plan), and a deposit for the coming school year.


• By August 1st, parents pay a majority of their tuition for the upcoming school year. Even where there are payment plans, the first payment is often the largest.

Parents know what they are expected to pay before they enroll their children in school. Administrators don't need to constantly "juggle" because the ball isn't constantly shifting as most collections take place up front.

3. The amount available for tuition assistance is pre-determined before scholarships are provided and assistance is divided from that pot of money.

Fire away. I realize that industry standard might appear to be somewhat draconian and some might label it "goyish." But this cat and mouse game that Mr. Yeshiva Administrator over at Dov Bear is playing with parents who bounce checks or won't make good on the agreed upon amount is no better.