currently non collectible Archives - Chicago IRS Tax Attorney

Are You In A Vicious IRS Circle?

September 22, 2016 by admin

Steven A. Leahy

Are You In A Vicious IRS Circle?

By Steven A Leahy

Here is the problem I see all the time. Someone has an IRS problem. They work to solve the IRS problem themselves. While they work on fixing their problem, instead of going away, the problem grows. It grows because they fail to address their current IRS obligations.

I helped a family who owed the IRS more than $60,000.00. The father ran his own business. He was very good at his profession – but the paperwork got to be a problem. Several years ago, the April 15th deadline to file his tax return was approaching and he needed more time to complete his tax returns. So, he filed IRS Form 4868 – Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. As the name of the form indicates, the extension is automatic. The filing date is then extended to about October 15 of the same year (depending on the Washington DC holiday schedule).

Problem solved, right? Wrong. His first mistake was he failed to estimate his tax liability and send a check with Form 4868. His next mistake was he didn’t file his tax return by the October due date. Once he filed the extension, he forgot about his tax returns. The beginning of the next year, he realized his mistake, he sent a portion of the tax he thought he would owe and promised himself to complete last year’s tax return and that year’s tax return by the April 15th deadline.

Now, completing the previous tax return became a big task. Many of the records were now hard to locate. So, as the April 15th deadline approached – you guessed it – he filed IRS Form 4868 for an automatic extension. This went on for several years. He would send some money to the IRS every so often to pay his back taxes he knew he would owe had he filed his tax return, but those payments left him no extra money to pay his current IRS obligation.

This family was in the Vicious IRS Circle, or a cascading tax problem. Instead of going away, the problem was growing because of the penalties and interest were growing, and becoming a real danger to their financial future. The problem was growing because they didn’t know how the IRS worked, so they couldn’t come up with a strategy to solve it. That’s when they heard me on the radio and decided to visit my office for a free consultation.

I explained to them that the first step to solving any IRS problem is getting into compliance. In this case, compliance meant filing past tax returns and paying current quarterly estimated taxes as they came due. Those with IRS problems need to focus on the future, rather than worrying about the past. If a taxpayer allows their current IRS obligations to be put aside in favor of paying the older taxes, the vicious circle begins and it becomes nearly impossible for taxpayers to solve the problem by themselves.

If you feel trapped by your IRS problem and want to stop the Vicious IRS Circle, you should contact me right away. My name is Attorney Steven A. Leahy and I help people solve their IRS problems Call me at 312-664-6649. Call now!

Solving Your IRS Problem – And Keeping it Solved!

August 18, 2016 by admin

Steven A. Leahy

Solving Your IRS Problem – And Keeping it Solved!

By Steven A Leahy

Listeners to the IRS Radio Hour – heard every Sunday afternoon at 5:00 on AM 560 The Answer – know I help people and businesses solve their IRS problems. What I have learned is – solving the IRS problem is only step one. The next step is keeping the problem solved.

When you reach an agreement with the IRS – whether the remedy is an offer-in-compromise, installment agreement or being declared currently not collectible – there are other conditions of the agreement, conditions often overlooked by taxpayers. For example, here are the conditions included in a recent installment agreement we worked out for a client with the IRS. The IRS wrote:

The other conditions of this agreement are:

– You file and pay on time all federal and state taxes due during the term of the agreement.

– We’ll apply all installment agreement payments to the oldest tax assessments first, then penalties, then interest on that assessment.

– You pay all installment agreement user fees.

– You provide a current financial statement when we request one. If you have a change in your ability to pay, we can revise or cancel your installment agreement.

In addition, the IRS will “apply any refunds you’re due to the amount you owe until you pay your balance in full. A refund payment isn’t a substitute for a monthly payment.”

The first condition is the most common stumbling block. Taxpayers often fail to file and pay all federal and state taxes on time. On time, to the IRS, means NO EXTENSIONS. If you fail to meet any of these conditions, the IRS will cancel the agreement and the taxpayer will find themselves right back where they started.

That’s why, once we solve a client’s IRS problem we offer to continue monitoring the case under our IRS Protection Plan. Under the IRS Protection Plan, we continue covering our client with our Power of Attorney, so we continue to receive all IRS notices. We offer on-going advice about tax issues and we complete their annual tax returns. Occasionally the IRS will erroneously cancel an agreement, or cancel an agreement but agree to re-instate the agreement after a request is submitted. Our IRS protection plan covers those items too. In addition, if you do default, we will offer a discounted rate to work with the IRS on a new agreement.

Even if you don’t default, some agreements, such as partial installment agreements or currently not collectible status may be reviewed after some time, typically every 2 years. And the IRS Protection Plan will provide a discounted rate for that service also.

So, even after you fix your IRS problem, you have to remain vigilant. That’s where Opem Tax Resolutions and The Law Office of Steven A. Leahy, PC comes in with the IRS Protection Plan. Give me a call at 312-664-6640 to fix your IRS problem and KEEP the problem fixed!

IRS – Taxpayer Bill of Rights

December 8, 2014 by admin

Steven A. Leahy
IRS – Taxpayer Bill of Rights

By Steven A Leahy

In June of 2014 the National Taxpayer Advocate, Nina Olson, announced the new “Taxpayer Bill of Rights.” Turns out, this initiative was merely a list of already existing rights – The right to be informed, the right to be assisted, the right to be heard, etc. Ms. Olson thought it important that this list of existing rights be supplied to taxpayers because “taxpayers overwhelmingly do not believe they have any rights.”

The “real” Taxpayer Bill of Rights (TBOR) are three pieces of legislation creating never before existing rights. Known as Taxpayer Bill of Rights I, II and III, these new laws were passed between 1988 and 1998, after nearly 20 years of Congressional Hearings. These changes to the tax are “[p]erhaps the most significant tax legislation in the history of tax administration.” This article will review those three historic pieces of legislation and the changes to the tax law each implemented.

Before 1988, the IRS pretty much had free reign for seizures and liens. “Without a court order, the tax code allows them the power to completely wipe out a bank account, attach almost an entire paycheck, and seize almost anything of value.” For example, the IRS only had to provide a 10 day notice before seizing property. The 10 day period didn’t give taxpayers enough time to raise money to pay the IRS. The result was – lots of seizures. Also, the only way to appeal an IRS decision was after you paid the tax the IRS insisted you owed – even if it turned out they were wrong.

The 1988 Congress passed the Technical and Miscellaneous Act of 1988, now known as the Taxpayer Bill of Rights 1 (TBOR 1). TBOR 1 was a modest first step. Senator Mark Prior, then chairman of the Senate Sub-Committee on Oversight of the IRS, introduced TBOR 1 and strongly supported it passage. He said “[this law] will stem the abuse of taxpayers by the IRS and provide redress when abuse does occur. It marks a victory for the little taxpayer. It levels the playing field.”

There are some Highlights of TBOR 1. It created the position of ombudsman, with the authority to stop certain IRS actions against taxpayers. Created an installment agreement option. But only required the IRS to “fairly consider the request.” The taxpayer was granted the right to assistance of a tax professional – an attorney, CPA or enrolled agent. Also permitted the taxpayer to stop an interview or audit to get advise of a tax professional. TBOR 1 also increased the time of Notice of Levy from 10 days to 30 days and created the right to audio record most meetings with the IRS.

Taxpayer Bill of Rights 2, or T2, was signed into law on July 30, 1996. T2 did not replace TBOR1, it merely supplemented it. T2 created a process to formally appeal liens, levies and seizures through the IRS Appeals Office, created to be totally independent of the collections department. The appeals office can stop these actions if the IRS collectors did not follow the correct procedures. T2 also created additional notice requirements for IRS actions relating to the Trust Fund Recovery Penalty, joint liabilities of married and divorced persons, and how the IRS applies credits. Finally, T2 made it easier for a court to award attorney fees and court costs to taxpayers who battle the IRS in court.

The biggest changes happened with the Internal Revenue Service Restructuring and Reform Act of 1998, better known as the Taxpayer Bill of Rights 3 (TBOR 3). The biggest changes involved IRS collections activities and the individual rights of each taxpayer. TBOR 3 created Innocent Spouse relief, the Offer-in-Compromise, required supervisor permission for any lien, levy or seizure, limited the IRS ability to seize a residence, created the right to a Due Process appeals in all IRS collections actions, release of levies if there is a determination that the tax obligation is currently not collectible, increased the dollar amount of exemptions to levy and garnishment actions. There were also changes to interest rates, and penalties applied while in an installment agreement, and disallowed interest and penalties without at least yearly notice.

The Tax Payer Bill of Right 1 – 3 has turned out, less then expected – there is still room for improvement. But we are worlds apart from where we were before TPBR. If you owe the IRS money, or have unfiled returns these changes can help you. To find out, you should give me a call. We can discuss all your options. Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Foreclosure Defense – Remedies

October 2, 2014 by admin

Steven A. Leahy
Foreclosure Defense – Remedies

By Steven A. Leahy

Foreclosure is the process necessary for a mortgage lender (i.e. mortgagee) to take possession of a property because the borrower (i.e. mortgagor, homeowner) defaults on a contractual obligation to the mortgage lender, usually a default in payments. In Illinois, Mortgage foreclosures are governed by the Illinois Mortgage Foreclosure Law (IMFL) 735 ILCS 5/15-1101 et seq. (2013). There are at least three alternatives for a homeowner to defend against a foreclosure, litigation strategies, loan modifications, and Chapter 13 bankruptcy. This article will discuss the first alternative, litigation strategies.

Illinois is a judicial foreclosure state. That means the mortgage company must file a mortgage foreclosure complaint with the court in the county where the property is located, and go through litigation in order to receive permission from the court to conduct a public sale. As in all litigation, the defendant (homeowner) can defend themselves in court or employ an attorney to defend them. Foreclosure defense has all the same ingredients of other litigation. The homeowner (defendant) can attack every step of the process: the adequacy of the complaint, the propriety of the plaintiff, the sufficiency of the promissory note and/or mortgage and compliance with federal and state regulatory laws.

First, under the IMFL the filed complaint must substantially follow the form set out in 735 ILCS 5/15-1504. If the complaint does not substantially follow the set form a homeowner (defendant) may bring a Motion to Dismiss alleging “the legal sufficiency of a complaint based on defects apparent on its face.” However, courts have concluded that as long a complaint includes all the requirements laid out in the IMFL, the complaint will survive a Motion to Dismiss.

Next, the defendant may attack the plaintiff’s right to bring an action in the first place. This defense is known as a lack of standing. The plaintiff must show that they suffered, or will suffer, direct injury or harm. Many mortgages in the Untied States are bought and sold on a regular basis, so the owner and holder of a mortgage and note change. To complicate matters, mortgages are usually serviced by third parties and held in Trust by yet another party. Often, the homeowner (defendant) will not recognize the named plaintiff on the complaint. That doesn’t mean the plaintiff lacks standing, but it may be a worthwhile investigation to find out if the plaintiff is the proper party.

Another way to attack the foreclosure case is to question the sufficiency of the promissory note and/or mortgage. Mortgage loans are governed by federal and state laws. The Truth in Lending Act (TILA), Home Ownership Equity Protection Act (HOEPA), Real Estate Settlement Procedures Act (RESPA) are federal regulations designed to protect consumers in the purchase of a home. For example, TILA regulates the information that must be disclosed to the borrower prior to extending credit: annual percentage rate (APR), term of the loan and total costs to the borrower. TILA requires this information to be conspicuous on the documents presented to the borrower before signing. TILA also details the remedies for violations of the Act – the most important to homeowners facing foreclosure is Rescission. Rescission allows the borrower to “recind” or “cancel” the loan.

RESPA is another federal regulation about closing costs and settlement procedures. RESPA is enforced by the U.S. Department of Housing and Urban Development (HUD). The Act requires that borrowers receive disclosures at various times in the transaction and outlaws Kickbacks and certain fee splitting arrangements. It also outlines penalties for violations, both criminal and civil.

The problem with this litigation strategy is that it can be very expensive and, in my opinion, ineffective. Litigation strategy is often employed just to buy more time in order to reach another remedy, like a loan modification. There are other ways to buy the time you need to get a loan modification. Because many mortgages have been bought and sold multiple times, locating the necessary documents to prove the foreclosure case can be difficult and time consuming. So, certain discovery requests may buy just as much time, at a reduced cost to the homeowner.

If you are facing foreclosure, you should take action. You need an attorney to help you sort through your options and choose the best remedy. Never hire a firm to help you with your foreclosure unless the firm is experienced in helping homeowner with all the possible remedies, loan modification, short-sales, deed-in-lieu, consent foreclosures, and bankruptcy. Before you do anything, you should give me a call. We can discuss all your options. Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Foreclosure Defense – Illinois Mortgage Foreclosure Law

September 29, 2014 by admin

Steven A. Leahy
Foreclosure Defense – Illinois Mortgage Foreclosure Law

By Steven A. Leahy

Foreclosure is the process necessary for a mortgage lender (i.e. mortgagee) to take possession of a property because the borrower (i.e. mortgagor, homeowner) defaults on a contractual obligation to the mortgage lender, usually a default in payments. In Illinois, Mortgage foreclosures are governed by the Illinois Mortgage Foreclosure Law (IMFL) 735 ILCS 5/15-1101 et seq. (2013). IMFL sets out the “mode of procedure” a mortgage lender must follow in order to foreclose on a property in Illinois. Under the code “’to foreclose’ means to terminate legal and equitable interests in real estate pursuant to a foreclosure.” That process can be divided in seven basic categories for residential real estate: Default; Filing the Complaint; Service of process; Judgment of Foreclosure; Redemption Period; Judicial Sale; Confirmation.

The first category is default. Default occurs when a homeowner (Mortgagor) violates a term of the promissory note or mortgage agreement. Most often, default occurs when the homeowner fails to make timely payments. But, default can occur for a variety of reasons. For example, failure to pay property taxes, keep insurance payments current, or deeding the property to another without the mortgage holder’s consent can all be considered a default of the loan terms. Usually, promissory notes and/or mortgages have acceleration clauses. An acceleration clause allows the lender to demand the full balance owed upon default.

The second category is filing the complaint. A complaint is the initial pleading in the foreclosure case. The foreclosure complaint lists allegations that, if true, entitle the plaintiff (the mortgage company) to foreclose. In Illinois, before a mortgage company can file a complaint to foreclose a mortgage with the court, it must first send a “notice advising the mortgagor that he or she may wish to seek approved housing counseling.” 1502.5. That notice must be sent at least 30 before filing the complaint. The foreclosure complaint must substantially follow a form set out in the IMFL.

The third category is service of process. Once the foreclosure complaint is filed, the summons, complaint, and notice must be delivered to the homeowner (mortgagor). Proper service of process gives the court jurisdiction over the defendant. Without jurisdiction the court’s orders are void. In Illinois there are several acceptable methods of service of process. The complaint can be handed directly to the homeowner (personal service), or to a person at least 13 years old who resides with the homeowner (substitute service). In some cases, when personal and substitute service have been unsuccessful, the court may allow the complaint to be served by publication. Service by publication allows the mortgage company to place a notice in a newspaper, rather than handing a copy of the complaint to someone. To complete service, a copy of the publication must be mailed to the homeowner.

The fourth category is Judgment of Foreclosure. Judgment of Foreclosure is the court’s order (decision) that permits a judicial sale of the property to occur after the redemption period. Redemption, the fifth category, is the right to pay the full balance owed in order to avoid judicial sale. In Illinois the redemption period ends 7 months from the date of service, or 3 months from the date of entry of a judgment of foreclosure, whichever date will give the homeowner the most time.

The sixth category is judicial sale. A judicial sale is the method used to enforce a judgment of foreclosure. The sale is an auction conducted by a party authorized by the court. The judicial sale must be preceded by a notice of sale. The notice of sale must be published at least 3 consecutive calendar weeks, on in each week, the first such notice to be published not more than 45 days prior to sale, the last such notice to be published not less than 7 days prior to the sale.” The mortgage company is often, but not always, the purchaser at the judicial sale.

The final category is confirmation of the sale. In Illinois, the sale is not complete until the Judge confirms the sale. Generally, the confirmation hearing occurs about 30 – 90 days from the date of the sale. The buyer gains possession of the property 30 days from the date the sale is confirmed by the court.

How long the foreclosure process takes, usually depends on what the homeowner does. So if you are facing foreclosure, you should take action. You need an attorney to help you sort through your options and choose the best remedy. Never hire a firm to help you with your foreclosure unless the firm is experienced in helping homeowner with all the possible remedies, loan modification, short-sales, deed-in-lieu, consent foreclosures, and bankruptcy. Before you do anything, you should give me a call. We can discuss your all your options. Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Are You In A Vicious IRS Circle?

Are You In A Vicious IRS Circle?

Solving Your IRS Problem – And Keeping it Solved!

Solving Your IRS Problem – And Keeping it Solved!

IRS – Taxpayer Bill of Rights

Foreclosure Defense – Remedies

Foreclosure Defense – Illinois Mortgage Foreclosure Law

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