Schools / Taxes / and 500 ways you are getting screwed

Quick personal note to start:

Dont come here often, no other reason than when I am at a machine (computer) I am dealing with the 401 company issues at hand.

So good to be back and have another tale to tell.

True story based on real experiences......

Background:

Worked at schools for near 10 years in China.
Never left the country once other than occasional runs to Hong Kong.

Past few years I have been setting up a computer tech company in Fujian Province.
Of late been going through the licensing of a Joint Venture Company to finally launch my company and this is where this tale begins.

JV License Requirements:

Foreign bank account holding foreign currency with bank confirmation letter printed in originating country (account origin bank office).

I couldn't do that as had been in China a long time so.....

International bank account, opened in China, able to hold foreign currencies, has X value (by license type) of foreign currency within, and proof of China work income.

"OK" I said, "I can do this" and this was where the fun began.

Got the bank account, had great fun researching and questioning banks and finally decided on Standard Chartered. (not getting paid for posting their name)
Set up the account for RMB, USD, Euro, and Pound, all ok there.
Deposited the X value in USD.
Then went online to print out my tax dept records.

Lo and Behold.....I dont exist.

S**T !!! (the bodily function that follows eating)   

So went to ask why.
Govt depts, one after another, and this was their answer:

You worked, ok.....But the schools payed you at the 4000rmb under the foreigner taxable income rate, and then added any more pay you received on top of that as housing and living allowances. This means you were never (remember its been ten years of working in China)....never paying tax....never ever, and there is no record anywhere of you working in China other than that kept at the visa issuance dept (PSB).

F**K !!! (something couples do for evening pleasure)

So now what?
Well I finally got that sorted by talking to bosses of the govt business license bureau and explained the events as they were and they allowed me to pass this step with an exception remark on the application form.

So all is ok.

What I wanted to share with you all here in Raoul's Saloon is that if you are working as a teacher in a school or anything similar to that check that they have registered you properly with the tax dept.

Because if you are not registered properly with the tax dept then any amount of applications that you could pen your name to in China; albeit business, home loans, residency, dadadada and this list is endless, will likely fail as most applications are checked via the China Tax Dept.

My advice:

Dont get burned at your job.
Demand a Govt. tax certificate with your name on it.

As the Govt people told me...
the schools do this to save you the troubles of keeping up with your China taxes...TRUE
Also TRUE, China taxes aint expensive.
More then TRUE...If your company is saving you this trouble, they too aren't paying taxes for hiring you.

In this last example: Even though you have the ALMIGHTY ZED (work visa), you are still just a little bit outside the law. You aren't paying taxes, your company aint paying taxes for you, therefore you don't exist.

Hope this helps.

Have a good one or 3 !

1. Most schools like you said are cheating the tax system in general, and don't want to pay any on your salary. (As you'll likely want more to make up the difference.)

2. A large majority of the places hiring foreigners, have no permit to do so.
Tip: Check the resident/work permit in your Passport (in Chinese) if the location section does not match the city you are working in, you are an illegal worker.

Definitely true.  During my first tour, the language mill made the mistake of hiring a foreign scumbage to managed the other foreigners.  Pay went from the language mill to him and then to me and the other employees he was mismanaging.  He told me "I'm doing this through my Hong Kong company.  There are no income taxes."  Obviously, there were one or more lies in his statement.  Hong Kong has income taxes.  Without a pile of additional paperwork, a Hong Kong company can't legally hire people inside of China.  If a Hong Kong company does have an employee inside of China, that employee would be subject to Chinese income taxes.  Personally, I doubt that this criminal had anything other than a HK bank account (maybe not even that).

every year  i get a letter of appreciation for my tax contribution from the tax office. 

every year  i get a letter of appreciation for my tax contribution from the tax office. 

Isn't it nice to be appreciated?

Quick personal note to start:


As the Govt people told me...
the schools do this to save you the troubles of keeping up with your China taxes...TRUE
Also TRUE, China taxes aint expensive.
More then TRUE...If your company is saving you this trouble, they too aren't paying taxes for hiring you.

In this last example: Even though you have the ALMIGHTY ZED (work visa), you are still just a little bit outside the law. You aren't paying taxes, your company aint paying taxes for you, therefore you don't exist.

Hope this helps.

Have a good one or 3 !

I found this out last year when I went to a branch of BOC and was told that my bank account wasn't good in my new city. Fine. I would open up a new account.

They needed tax receipts.

The FAO refused to register me with the local tax office. Supposedly, I am considered a temporary worker, so the school didn't have to report my taxes.

Okay. Scr*w it. I saved my money for a few months and kept it hidden in my apartment. Guess what? I couldn't convert rmb to dollars without tax receipts.

I went to the tax office with a local. I was told that I needed a letter attesting to the fact that I was employed by the school. (My RP, FEC, Visa, and contract weren't enough. The tax office needed a letter). Back to the FAO for a letter.

---I am not allowed to write such a letter.

WHAT?!

--The school president must write the letter.

Fine. Where's his office?

-- Upstairs.

I go upstairs to where it says "School President". There's no furniture in the office. I go back downstairs.

There's nobody in that office. Not even a desk.

--- Yes, I know.

Okay where is the school president?

--- He isn't here.

Where is he and when is he coming back?

--- He's at home and he's is not returning to the school.

What?!

--- You have to wait until we get a new president.

When will that be?

--- I don't know. We have been trying to get a new one for six months.

Fine. I got faculty to change my savings every few months for me until the banks quit making the transactions.

I had several thousand rmb saved and was leaving China in two weeks. I was getting desperate. A friend who seemed to know everyone in the city told me that someone owed him a favor.  I met him at the Bank of ______.

We had to wait for his friend to arrive. We stood there for a few minutes. A gorgeous Chinese woman drove right up the sidewalk in a shiny new Mercedes and parked right in front of the revolving doors. She took my money and told us to just sit and wait. The woman produced NO identification, and she signed NO paperwork.She told them what she wanted. Nobody behind the glass windows said anything. They just went on. Business as usual. Somebody emerged from the back office with my dollars. She handed my dollars to my friend, and she got into her Mercedes and drove off. All my friend told me was that the woman was "somebody's wife".

It was crazy that I had so many problems changing money, but a local who had connections could do it in minutes without an ID.

F**K !!! (something couples do for evening pleasure)

EL has told me that sometimes it's not just couples, and it's not always at night.

My school is messed up, but on this issue they seem to have got it right. They will get tax documents issued within days upon request.

read this and you can see all things are far from rosy in the west either.
http://www.villagevoice.com/2012-08-01/news/For-Profit-Colleges-con/

Bobby Ruffin Jr. was only 14 when a recruiter from Ashford University called. The Birmingham, Michigan, boy thought he'd clicked on a link promising help finding money for college. It was actually just a lead generator for the for-profit, online school's sales staff.


Courtesy Barmak Nassirian
Barmak Nassirian, former official with the American Association of Collegiate Registrars and Admissions Officers: “Overadvertise, oversell, overcharge, and underdeliver. They found a system where the pitch goes to one guy and the bill to someone else.”

Courtesy Chris Pantzke
Iraq-war veteran Chris Pantzke ran up $26,000 in debt and burned through an additional $65,000 of his GI Bill benefits with almost nothing to show for it at the Art Institute of Pittsburgh.
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More About
Todd NelsonSuzanne LawrenceKathleen BittelHigher EducationFor-Profit Education
At the time, Bobby was an A student. Hoping that homeschooling would deliver something better for their son, his parents had pulled him from the troubled Detroit schools. He told the recruiter that he wanted to be a doctor. She assured him that Ashford could be a stepping-stone to that dream.

Never mind that he was only in the eighth grade. "She said, 'You'll be working toward a degree as a medical doctor, so when you do graduate high school, you're almost there,'" Bobby says today. "I'm like: 'This is great. I'm going to talk to my mom.' And she's like: 'No, I wouldn't tell your parents because that would take away from the shock when it happens. If I were you, I'd complete the program, and when graduation comes around, let them know. Mom and Dad will be super excited.'"

Admission to Ashford requires a high school diploma or equivalency. So when it came time to fill out the financial-aid forms, the recruiter told Bobby to claim that he'd already graduated. He objected, but she insisted "the loan-processing company will go back and correct everything." Still, he left the graduation date blank. Someone filled it in, because Ashford was soon receiving federal-student-loan money on his behalf.

Of course, it's illegal for kids Bobby's age to receive financial aid. But for-profit colleges haven't always been scrupulous when it comes to raiding the federal treasury. Between student-aid and GI Bill programs, most schools receive 90 percent of their revenue from the American taxpayer. And the recruiters—often little more than salesmen paid largely by how many people they enroll—are driven mercilessly to keep those cash registers ringing.

Students don't get much in return. Although tuition rates can run as high as those at America's most esteemed universities, the education is generally substandard. In the end, most kids wind up walking away with a questionable degree bought at top dollar—and a mountain of debt to accompany it.

Bobby took online classes for almost a year. But when he wouldn't endorse Ashford's lying on his financial-aid forms, administrators miraculously discovered that he was under 18. Since this left him ineligible for federal aid, Ashford was forced to return his loan money to the feds.

The school wouldn't be eating those costs. Bobby would. Ashford, which declined interview requests for this story, sent him a bill for $13,000.

Last fall, Bobby was finally able to enroll at a real university, Eastern Michigan, where he was named a national collegiate scholar. Yet he still owes Ashford. Because that's a private debt, he isn't eligible for deferments while he's in school, and any future wages could be garnished.

Unfortunately, this isn't a scam that only targets the young and naive. The for-profit industry is so rife with deceit, it has been billed as the second coming of the mortgage-loan debacle. And the same people are behind it. Three-quarters of all for-profit students are enrolled at schools owned by Wall Street banks and private-equity firms.

All told, they soak $30 billion a year from American taxpayers. But even in the age of slash-and-burn government, Congress has shown no interest in stopping it.

"The problem with the subprime [housing] scam was that it got so big, it almost brought down the entire world's economy," says Barmak Nassirian, a former official with the American Association of Collegiate Registrars and Admissions Officers. "This one's wisely limited to $30 billion a year, which is highly sustainable. In the context of a multitrillion federal budget, that's not even a rounding error."

Consumer Fraud As a Business Model

You might not know it, but you're sitting on $117,000. That's basically how much every American is potentially worth in government student aid. Want to attend grad school? Throw in another $114,000.

And as for-profit colleges have discovered, an 18-year-old with 100 large makes for a very easy mark.

In order to get in on the gravy train, a school only needs accreditation from some supposedly neutral body. But Congress neglected to say who should do that accrediting, resulting in a system loaded with charlatans. Some agencies have built sturdy reputations over decades. Others are little more than rubber-stamp factories, more geared toward gobbling up members' dues than safeguarding kids.

"It never occurred to [Congress] that as billions of dollars get attached to the recognition process, the process would get corrupted," Nassirian says. "When you say yes, you gain membership dues. After all, you're living off these dues."

Yet even bargain-bin accreditation takes several years. So the titans of Wall Street found a way around this by purchasing small, failing schools to snatch up preowned accreditation.

Take Bridgepoint Education. Its majority stockholder is Warburg Pincus, a New York private-equity firm. When it needed accreditation for Ashford University, it bought the 87-year-old Franciscan University of the Prairies, a struggling, 300-student religious college in Clinton, Iowa. Overnight, it was transformed into the online powerhouse Ashford.