September 2022
Most often, I get the question of what the EA acronym next to my name stands for and what it means. It stands for Enrolled Agent, a tax professional licensed by the federal government and it means that as an Enrolled Agent with IRS, I am authorized to appear in place of the taxpayer at the Internal Revenue Service. Further, unlike attorneys or CPA’s, Enrolled Agents like me specialize in taxation. My expertise in the tax law over the years of practice makes me an effective representative when the IRS audits taxpayers.
Twenty years ago, I got a bad taste of investment people cancelling good insurance policies to illegally sell another policy for commissions. Because of this, I decided to get licenses to benefit my clients. I sat for Series 7, General Securities, Series 24, Registered Principal to manage my own branch, and Series 63 to be a Registered Financial Advisor. I simply managed securities and pensions for clients until a principal at a firm got in trouble and inherited a branch as OSJ of many his people in Orange County. I am retired now but kept my insurance licenses which include Fire and Casualty, investment annuities, life, health, and disability.
We did some advertising this year and added almost 100 new clients who many had gone to CPA firms before or did their own returns, and as a result received notices from IRS and FTB. Setting up new clients requires more work on the computer and could be overwhelming in terms of level of difficulty as we try to make amendments or corrections in their returns. The solution for the next year will be to drop the advertising and quit working ten- hour days for six months straight through the year. We should all be ahead, and I will get to know my clients better.
Now the Bad News: My old BMW license plate has three sevens, and it has been a good luck car, and with quick handling I was able to evade a house sized motor home that wanted my road on the freeway once. Yet, we have two sevens in the recent economy worth noting. The first is that the Residential Mortgage rate has climbed past 7% and will keep going as the Federal Reserve raises their funds rate again. The other is a new tax from the Cap-and-Trade Program which has resulted in sky rocketing fuel prices in California. Another first from California that I saw $7.00 at two gas stations on my way to get my high octane at Costco [which used to be $5.99.] California has a special GREEN gasoline formula and because of local refineries closing will have lost 20% of capacity by the end of next year.
Federal news at last: The 16 billion of unemployment fraud figures reported before were wrong. The figure announced this week from Inspector General of the Labor Department was $45.6 billion. The bean counters had not noticed that Organized Crime had worked all 50 states with the same applications. Whoa! They did an excellent job of finding another $30 billion of fraud that nobody had noticed. No wonder the National Debt now at $31 Trillion is equal to 137% of the year’s Gross Domestic Product.
Our Strategic Petroleum Reserve Plan [SPR]: In 1975 the Organization of Petroleum Exporting Countries [OPEC] decided to embargo and cut off oil shipments to the USA. A huge reserve of oil, 300 million barrels [90 days of imports] was established for future problems. President Biden has publicly promised to ‘end fossil fuels’ as he did when he shut down the Keystone XL Pipeline project. Yet, he has made new demands on the SPR reserves and brought them down to about 50 days supply at this time. That is a serious matter to promise ending production while they drain off the important reserves.
Back to oil production: From a WSJ editorial the substance of a meeting when Democrat Rashida Tlaib asked the director of JP Morgan Chase if the conglomerate bank had a policy against funding new oil and gas products. Mr. Dimon answered, “Absolutely not, and that would be the road to Hell for America.”
“Yeah, that’s fine Sir, you know what, everybody that got relief from student loans [who] has a bank account with you should probably close their account.”
This testimony highlighted the extent to which climate-obsessed lawmakers and regulators pose a greater threat to the economy and financial system than changes in the climate. Proposing a bank run to protest an institution’s fossil-fuel investments is certainly extreme.
China’s Coal Power Boom: The Paris Agreement allowed China to increase their emissions for electrical generation, while the U.S. of A has cut decreased its coal capacity by 1/3 by 80 gigawatts, China is increasing their coal burning capacity for electricity by 100 gigawatts. Two thirds of their electric energy is from coal generation. John Kerry did not get through there at all, but he sure gets through in Europe and the U.S. of A.
New Credit Card controls: Gun Control Advocates have won a new merchant category for firearms retailers. A new four-digit number, [a MCC] will designate and monitor sales made for firearms sales. Another computer item for the ultimate gun recalls by this Government.
California’s Union Whopper: The Fast Recovery Act is now law and gets a Black star for establishing the first State Council to establish minimum wage standards for an entire industry. The new Council could raise wages from $15.50 on January 1st next year to $22 and mandate many new social benefits for employees such as more paid vacation and paid days off for “protest days”. It is utterly amazing that this new Recovery bill has such good cash benefits for the fast-food industry which hires mostly teenagers and recent High School kids who do not go to college.
California Progressive Mind Over Matter: The Air Resources Board moved this week to ban gas space and water heaters by 2030 AND proposed that all big rig trucks must go electric. The sale of gas furnaces by 2030 is now in effect. Old furnaces breaking down will need to be refitted with electric only units. Several weeks ago, Californians, during a heat wave, were told not to run large appliances or charge electric, cars in peak hours. Blackout warnings are expected this coming Winter. Hot water and heating will be next on the prohibited shortage list and the wave of electric cars has not hit yet.
Biden’s Union Whopper: President Biden broke up a proposed railroad operating engineers’ union strike by granting all union demands for a 24% increase in labor costs.
The Blue Chips stock market: On October 1st, the DJIA was off 20% this year and with the S&P becoming a BEAR market. All good things have their challenges. Hang on to your hat or if on TV, your wig!
Gold: Has quit climbing into the sky for investors as the sellers broadcast daily. It is still a haven, not to hold forever without losses but as has plummeted from $2,050 per troy ounce in April this year to $1,678 last week. The Bear is also visiting here.
Oil and gas leases: Social Costs, which are found from staring at the sun too long, are a new element of the Biden Administration stranglehold on energy production. The first 19 months of this administration have leased a mere 126,228 Federal acres for oil and gas production. The least under any President since World War 2.
This is all folks. Remember, October 17, Monday is the final date for tax extension. Our office will recess the week after for a tax seminar. We will make sure we get lots of candies for the Halloween when we come back.
Best wishes to all.
Phil Chute, EA & Staff