I Was Ranked #2 Best Tax Preparation Service in Chicago on Thumbtack.com


Many thanks to my customers, both past & present for giving me great reviews on Thumbtack.com.  I was listed as the #2 best tax preparation service in Chicago based on their reviews!  Perhaps next year I’ll get to #1!

Please feel free to check out the link here.  You’ll need to scroll down to see the list.

Thanks again everyone!

Please feel free to leave your thoughts in the comments section below:

 

Cheers!

Thomas C. Hodge, CPA
President

The Hodge Group
4118 N. Western Avenue
Chicago, IL 60618

773.237.6369

www.thehodgegroup.com

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Got an IRS notice? Here’s what you should do.


The IRS recently released advice on what you should do if you get a notice from them.  Some good advice 7K0A0079there and recommend reading it, as well as my client handout on the same topic (feel free to download & share!)

If you do get an IRS notice (or one from your state or other taxing body) feel free to contact me through the form below.

Cheers!

Thomas C. Hodge, CPA
President

The Hodge Group
4118 N. Western Avenue
Chicago, IL 60618

773.237.6369

www.thehodgegroup.com

Best Tax Preparers Website

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Gotten a suspicious call or email from the IRS?


If you follow me on Facebook, you’d know I recently got a voice mail from an “Agent Smith from the IRS” stating to IMMEDIATELY call his number as several IRS agents were en-route to arrest me for not paying my taxes. Since I’m up to date on my tax payments, I certainly wasn’t worried about agents coming by for a visit (and thankfully none did!)

Couple of my clients had received similar calls earlier this year, as have other people I know so don’t be surprised if you get a call like this.  If you do, get as much info as you can, including the person’s name (or whatever they’re willing to tell you), an Employee ID (all IRS employees have an ID number and are required to disclose it).  Also, be sure to record the day and time of the call, and the caller ID if you can.

You can then call 800.366.4484 to see if the call was legitimate.  If it wasn’t you should report the incident to TIGTA (Treasury Inspector General for Tax Administration) – here’s that link.

Other people have said they’d gotten emails from the IRS asking the person to send copies of their W2 or other personal info (bank info usually) so a return could be processed.  Unfortunately, these types of messages (email in particular) are usually scams or phishing schemes.  These emails should be forwarded to phishing@irs.gov and then delete it from your system.

I went to the IRS website and found a page describing what to do in the event you get a ‘suspicious IRS-related communication’ – here’s the link.  There’s a bunch of good info there, including how to respond to schemes and where to report it, plus tips on preventing identity theft (an issue I discuss with all my clients and have a free handout on – click here for your copy).   I especially like the YouTube videos on identity theft that are linked from the IRS page.  The page also has additional info on dealing with suspect faxes (never had to deal with that), websites and texts (something I’ve not even heard of until now).  This is a good resource and recommend reviewing it and forwarding it to people that may need the info.

In my case, I did report the call to the IRS (sent an email to phishing@irs.gov – subject of “IRS Phone Scam”).  Also, I went to the TIGTA page  and filled in information. Recommend you do the same so the IRS can get more info on the scams and (hopefully) take some action to stop them.

Have you dealt with these scammers?  Would love to hear your stories and how you handled the calls, emails, faxes, etc.  Please contact me through the form below.

Cheers!

Thomas C. Hodge, CPA
President

The Hodge Group
4118 N. Western Avenue
Chicago, IL 60618

773.237.6369

www.thehodgegroup.com

Best Tax Preparers Website

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Trouble reaching the Wage Levy unit at IL. Dept. of Revenue?


Often, I need to reach out to the government (state, federal, and local) to determine what is happening on a particular tax case.  In case you’re having trouble reaching the Wage Levy unit, here’s what I found out:  it may be easier to go directly to their offices if you don’t have an agent assigned to the case.

It seems the wage levy unit is very understaffed and has a ton of cases per worker (seems like a lot of tax agencies are that way) but this group has particular problems, including only 1 fax machine for an entire floor!  Also, cases may be given to a higher level manager first, and then given to someone else so you may not have a correct contact.  In addition, voice mail wasn’t an option with the person I tried to call (I was told in person that ‘we’d get hundred of messages a day’).

In my case, my client hadn’t filed a few years of tax returns, and had a wage levy on two of the non-filed years.  Normally (and in this case), this is due to the IDR getting a copy of a W2 from thIMG_0925e IRS and then seeing if the tax return is in their (IDR) system.  If not, the IDR will issue notices to the taxpayer asking for their return, and if no return is filed within a certain time, the IDR will file an estimated return for the taxpayer (IRS also does this).  However, the filing always assumes the taxpayer is single, no dependents and no deductions so the estimated tax is almost always higher than the actual return.  Also, the W2 copy the IDR gets from the IRS does not have state withholding so the estimated tax return gives no credit for withholding.  Add in the interest and penalties, and you get a big tax bill.

Also, my client had moved and I’m guessing the IDR had the old address and mail didn’t get to the taxpayer and there were no copies of correspondence in the taxpayer’s file (and it was a well documented file).

The IDR wage levy paperwork (copy was given by taxpayer’s employer) had a contact name (or so I thought) on the form, so I did the usual – get Power of Attorney (POA) from taxpayer, attempt to fax a copy to IDR representative, and then call.  This is where it got interesting – the 3 times I attempted to fax to the Chicago-area fax number, the fax didn’t go through and I got an error stating the recipient’s machine had an error.  Ended up calling the problem resolution division in Springfield, IL and the rep there said I could fax a copy to her to enter into the main computer system but she couldn’t help me on the case since there was a rep already assigned.

By this time, I’d called the Chicago rep’s phone at least a half-dozen times over the course of about two IMG_1277weeks and it was busy every single time and never went to voice mail.  I asked the Springfield rep if this was the correct number, and it was.  So, I kept trying, including calling in off hours and on the weekend, and the phone never got picked up and never went to voice mail.  So, long story short – I couldn’t reach the rep listed on the case either via phone or fax.

Decided to go directly to the offices in downtown Chicago and told the receptionist about my case.  She was very pleasant and told me the case wasn’t assigned to anyone and the person who’s name was on the paperwork was a group manager.

Receptionist went in back & came out saying to have a seat and someone would be with me IMG_1012shortly and about 15 – 20 minutes later, two stern faced women came out, sat behind a counter of chairs and asked me to come over.  Neither would introduce themselves (that was odd! and eventually I was told all I needed to do to resolve the case was to fax copies of taxpayer’s W2 forms.

Before leaving, I asked the women how I could get in touch with anyone within the unit – blank stares were exchanged before one suggested fax (please realize that IDR uses e-mail!).  I mentioned the trouble faxing and I7K0A0079 was told, ‘there’s only one fax machine for the whole floor’ [REALLY? – you’ve got to be kidding me, but according to someone else I talked to, that’s the truth!]

I again asked what they’d recommend and the only reply was, ‘well, you can come in again’.  I asked about email and they said that was only when an agent was assigned.

So, if you’re having trouble reaching the Wage Levy unit, I recommend going into their offices – security can be a pain but there wasn’t a long line and I did get the info I needed to release the wage levy (and that was done within 24 hours of faxing the W2 forms).  If you don’t have an agent assigned to the case, not sure what else to try but would love to hear anything you’ve done on your cases.  Please send any ideas, thoughts or comments below:

 

Cheers!

Thomas C. Hodge, CPA
President

The Hodge Group
4118 N. Western Avenue
Chicago, IL 60618

773.237.6369

www.thehodgegroup.com

Best Tax Preparers Website

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Think Setting Up A New Company Will Eliminate A Tax Debt? Think Again!


I’m dealing with something I’ve not seen in a long time – a potential “Successor of Interest” case.  This is where a company that owes taxes is ‘closed’ and a new one opened in the same field, using the same equipment (or assets) and by the same people or related parties.  A potential client who was recently referred to me tried to do this.

What can happen in this instance is the IRS (or another taxing agency if it’s not Federal Tax) can file a Successor of Interest lawsuit stating the first company was closed simply to avoid paying taxes and go after the new company (“Successor Company”).  The IRS’ success rate in these cases is about 90% as it is fairly easy to follow the trail of assets (especially when there is no bill of sale of said assets from the original company to the Successor Company).  I’ve heard of a case like this where the IRS simply went to the Successor Company and seized the assets (essentially putting them out of business) to pay for the old tax debt.

You may ask, “What if the assets are sold for $1?”.  Then the IRS (and/or the Tax Court) would determine if that is considered an arms-length transaction (fair-market value).  If it is determined the sale price is below the market value then the sale could be invalidated or the ‘deemed amount’ increased to what the IRS/Tax Court decides.  A sale not at fair-market value would not stop the lawsuit.

As you can imagine, the costs of this type of lawsuit can be staggering, both in terms of money and time.  Plus the IRS can (and probably would) put liens or levies on assets, including bank accounts making the situation that much harder.

The best way to resolve a case like this (aside from not closing the first company & setting up the Successor Company!) is to set up a payment plan for the old debt, pay that down over time and keep current with the tax debt on the Successor Company.  Since the original company is ‘closed’, then you can’t offer to pay a lessor amount under these circumstances so the full amount of taxes owed would need to be paid, plus interest & penalties as those accrue.  If the original company is still in operation, then you can possibly negotiate your debt down through an Offer in Compromise – another reason not to close the original company!

You simply can’t close a company & assume the tax debt is forgiven – the IRS and other taxing agencies have ways to get to funds/assets that should have been used to pay the debt.  Highly recommend anyone thinking of trying this potential tactic talk to their accountant and/or attorney before going this route.

Do you have questions on this (or another tax relief issue)?  Please contact me through the form below.

Cheers!

Thomas C. Hodge, CPA
President

The Hodge Group
3040 N. Menard Avenue
Chicago, IL 60634

773.237.6369

www.thehodgegroup.com

Best Tax Preparers Website

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Need Tax Relief? What should you look for?


Reading the business news recently, I came across an article about how the Federal Trade Commission (FTC) was returning $16 BILLION to the customers of a tax relief company that they (FTC) had previously put out of business.  American Tax Relief (ATR) was found guilty of falsely claiming it could reduce tax debts.  Unfortunately for all the people who signed up, they are only getting back an estimated 16% of the monies given to ATR.

This makes at least 4 cases where tax relief (or tax problem resolution) companies have been put out of business – ‘Tax Lady’ Roni Deutch in 2011, as well as JK Harris and TaxMasters in 2012.  On one site (www.accountingtoday.com), a person, claiming to be a retired IRS Appeals agent said (in part) that those companies would:

 

greedy_hand

“…prepare a very simple Appeals protest, or Offer in Compromise application, or Innocent Spouse Relief Request form, etc. and then disappear.  I would contact the named POA (power of attorney) to discuss the case and they would say they were no longer representing the taxpayer, their engagement only included the preparation of the application, etc.!!!  The taxpayers would tell me they paid from $3,000 – $5,000 for this minimal service.”

Things like this upset me as I’ve been working with tax relief clients for many years, and I keep hearing all the radio ads that say you can ‘pay pennies on thousands of dollars owed, if you qualify’.  The key words are ‘if you qualify’ as every situation is different.

Tax Agencies will review your financial situation (both current and projected) to see if there is a reasonable chance you’ll be able to pay the debt either immediately or over time.  In addition, the Tax Agencies will look at your assets to see if anything can be used to pay down the tax debt immediately (401k or retirement accounts, home equity, major assets, etc.).  Health issues, job loss, economic downturns and other factors will be taken into account.  Even when you enter into an agreement (payment plan, offer in compromise, etc.) penalties and interest will continue to accrue.  Also, all of your tax returns must be on file with the Tax Agency – they won’t do any negotiation with open tax returns.

If you’re not comfortable with working with the Tax Agencies on your own and decide to seek help, be careful, do your homework and make sure you ask any and all questions that come to mind – here are a few I’d recommend:

  • What happens if the Taxing Agency turns down your first proposal – what will you do next?  How many times are you willing to send in a proposal?
  • How long has your firm been providing these services?
  • How much of your fee will be paid up front or as a retainer? (always a bad sign when the firm wants more than 50% upfront)
  • Who will be working on my case – someone local or in your home office?  (some firms out-source their services to practitioners in each state especially if there are state & local taxes involved)
  • Is the person who will work on my case accredited to practice before the IRS (or other Taxing Agencies)?
  • Does your fee cover both state/local  & federal taxes?
  • Will your firm file late tax returns and how much will that cost?
  • Are you accredited by the Better Business Bureau (BBB)?
  • Ca you give me at least 3 references with similar tax problems who you’ve helped?

Again, each case is unique – you may have additional questions for potential tax relief companies so be sure to add them to your list.  Make sure you feel comfortable with whomever does handle your case as that person will have to know almost everything about your finances, assets, health, family, etc.

If you’d like more information, or have a tax relief question, please feel free to send me an inquiry below:

Cheers!

Thomas C. Hodge, CPA
President

The Hodge Group
3040 N. Menard Avenue
Chicago, IL 60634

773.237.6369

www.thehodgegroup.com

Best Tax Preparers Website

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Will My Return Get Audited?

What does the IRS look for an audit of individuals?


Wondering if your personal tax return might get audited?  Do you know what the IRS looks at?

Obviously, the IRS won’t give out a list of items that they look for, but based on audits, here are some known ‘red flags’ (for some items, I have a free brochure – click on the link for the PDF in a new window):

  • Large Hobby Losses – having wage income and a large loss on a Schedule C especially for an activity that sounds like a hobby instead of a business.  See Hobby vs. Business
  • Owning a cash-intensive small business such as hair/nail salons, car washes, taxi/limo service, etc.
  • Claiming 100% business use for a vehicle, especially if it is your only vehicle.  See Business Use of Vehicles
  • Large write-offs of business meals/entertainment or travel on Schedule C or Form 2106  for Unreimbursed Employee Expenses.  Woman Pondering
  • Rental losses for Real Estate Professionals or individuals with large wage (W2) income.  See Rental Income and Expenses
  • Taking larger deductions than your income allows – especially for taxes paid or real estate interest.  Backup documents for these items will probably eliminate any IRS problems.  See Itemized Deductions Homeowners
  • Foreign bank accounts, especially in ‘tax havens’ that don’t disclose account owners. The IRS has made this a high priority for a few years.
  • Operating an S Corp or LLC where you draw a minimal salary.  The IRS has said that owners of these businesses should draw a ‘reasonable’ salary and people have been passing profits through to their individual returns to avoid paying the match on Social Security & Medicare taxes.
  • Using your Home as a Business – people try to write off a lot of items, but only some are allowed.  See Business Use of Home

These are some of the items that have been looked at during audits over the last few years.  As always, keep adequate records to support your deductions.  See Recordkeeping for Tax Purposes.

With the tax season rolling along, you should discuss any issues you many have with your tax preparer.  I’m available if you need help with your taxes, or have any comments or questions.

Cheers!

Thomas C. Hodge, CPA
President

The Hodge Group
3040 N. Menard Avenue
Chicago, IL 60634

773.237.6369

www.thehodgegroup.com

Best Tax Preparers Website

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Connect on LinkedIn.