IRS Help IL 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!

My Ex Claimed the Child Deduction – Now What?

September 1, 2016 by admin

Steven A. Leahy

My Ex Claimed the Child Deduction – Now What?

By Steven A Leahy

It’s August, and the IRS is starting to go after taxpayers who listed a child as a dependent, when another party listed that same child as a dependent. Who gets the deduction? This is the most common question I get around this time of year.

Here is the typical scenario. Parent A and Parent B live apart. The child lives with Parent A, but Parent B has joint custody. Parent A claims a dependency exemption on their tax return. Later, Parent A discovers Parent B has already claimed a dependency exemption on their tax return. Because a child’s social security number is necessary to claim a dependency exemption, the IRS’ computer system flags both returns and sends a notice of deficiency to each parent. The question rises, “Which Parent is entitled to claim a dependency exemption for tax purposes?”

First, let’s talk about what is at stake. The IRS provides as a deduction an exemption from taxable income ($4,000 for 2015) for each “dependent.” A dependent is defined as either a “qualifying child” or a “qualifying relative” of the taxpayer. To be considered a “qualifying child” of the taxpayer, the child must (among other things) have the same principal place of abode as the taxpayer for more than one-half of the taxable year. In addition, a qualifying child may enable a taxpayer to claim other benefits. Benefits like Head of Household, the child tax credit, the child and dependent care credit, and an earned income tax credit. In total, these benefits amount to thousands of dollars.

Generally, when parents are legally separated or divorced, the dependency exemption is awarded to the custodial parent. The custodial parent is the parent with whom the child lived for the greater number of nights during the year. But there are exceptions. If the custodial parent “signs a written declaration” releasing his or her claim to the exemption and the noncustodial parent “attaches such written declaration to the noncustodial parent’s return for the taxable year” the non-custodial parent can claim the exemption. The declaration by the custodial parent must be made on Form 8332 or in a signed document substantially similar to Form 8332.

Often, the non-custodial parent has a divorce decree, separation agreement, or some other agreement that spells out the rights of the non-custodial parent to claim the deduction. If the decree or agreement went into effect before 2009, the non-custodial parent can attach certain pages to the tax return instead of Form 8332. However, if the decree or agreement went into effect after 2008, the decree or agreement can’t be attached and the non-custodial parent must use Form 8332.

You can see how this can become a problem – parents at odds with who gets the tax benefits. The IRS has sided with the custodial parent; even if the divorce decree or agreement says the custodial parent has agreed to waive the right to claim an exemption for the child. If the custodial parent released a claim to exemption and signed Form 8332 granting the right to the non-custodial parent, the custodial parent can complete Part III of Form 8332 and revoke that waiver, as long as they provide a copy of the form (or make a reasonable effort to provide actual notice) to the non-custodial parent and attach the revocation to their own tax return for each year.

Yes, I know it is complicated. Dealing with the IRS is ALWAYS complicated. If you need help with the IRS, you should work with a local law firm. Better, you should give me a call – Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

IRS Telephone Scams

May 13, 2016 by admin

Steven A. Leahy
Beware IRS Telephone Scams

By Steven A Leahy

The biggest news about the IRS lately is really NOT about the IRS. I receive at least 5 calls a week about the “IRS” contacting taxpayers and telling them they are under investigation, or about to be sued or about to be arrested because the owe the IRS money and haven’t paid.

These calls are SCAMS – it isn’t the IRS calling! That is NOT how the IRS works. They will NEVER take a payment over the phone, or accept iTune cards as payment. That’s right, iTune cards. I was on David Hochberg’s Home Sweet Home Chicago Radio show last week to address these scams. You see, David received a call himself. We had previously addressed this issue on his show, so he knew it was a scam. He played along to see where it led.

Initially, the caller told him she could not help him – it was too late. But, with a little questioning, said she could talk to her supervisor to see if they could resolve the matter without having him arrested. Sure enough! If he went to Walgreens, CVS or Rite Aid and purchased around $3000.00 in gift cards, the “IRS” would not arrest him. The gift cards are also known as, get this, iTune cards! So, the caller told him to call back when he had the iTune cards and read the numbers on the back of the card.

As silly as this sounds, it WORKS. There wouldn’t be the number of scam calls as there are if there weren’t vulnerable taxpayer’s out there falling for it. The ONLY reason the scam works is the public is scared to death of the IRS and will do just about anything to avoid being a target.

Now, on rare occasions the IRS will call taxpayer. But they will NEVER ask for payment in this manner. If you EVER receive a call from the IRS, or someone claiming to be from the IRS, tell them you need to speak with your attorney, then hang up the phone. Immediately call my office for advise. If you need help, we are the firm to help. But, if you don’t, we will let you know that for FREE.

So, if you have ANY IRS questions, Call me, Attorney Steven A. Leahy at 312-664-6649. I am the Chicago IRS Answer Man.

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?

My Ex Claimed the Child Deduction – Now What?

My Ex Claimed the Child Deduction – Now What?

IRS Telephone Scams

Foreclosure Defense – Remedies

Foreclosure Defense – Illinois Mortgage Foreclosure Law

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