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

Friend us on FaceBook.
Connect on LinkedIn.

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

Friend us on FaceBook.
Connect on LinkedIn.

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

Friend us on FaceBook.
Connect on LinkedIn.

Have you heard the commercials on reducing your tax debt? What’s the true story?


I’ve worked on tax debt reduction and tax problem resolution for years and I’ve helped many people with lowering / eliminating their tax debt, when they are eligible.  The key words are ‘when they are eligible’.

Had a case this week that could be the ‘poster child’ for tax problem resolutions.  Client got a letter from IRS stating that he owed about $106,000 for a 2 year period.  Walked out of the meeting with the IRS and he’ll probably owe about $3,200.  Even got a payment plan ready to go for about $45 / month…  Sounds like one of those deceptive commercials, but it does happen – when the facts / situations line up.

In this case, my client is a truck driver who was audited – he didn’t respond to IRS notices over several months, so the IRS disallowed all deductions (fuel, tolls, repairs, etc.) and this resulted in huge tax bills, plus penalties & interest that came to about $106,000.

He was referred to me and after discussions, realized all he had to do for those 2 years was recreate his tax return – spoke to the return preparer and got copies of the return and got the client to go through his papers.  He was able to put things together while I did some comparative analysis, fact checking, etc. and things came together.  He had the materials to support his deductions, and I was able to argue the remaining items, with the exception of 1 item that neither he nor the preparer could remember.  We’re still looking into that to see if there is backup, but if not, he’ll owe tax based on losing that $19,000 deduction – hence owing the $3,200.

So, I coached my client on how to act and talk, plus keep calm & look confident while putting together overwhelming evidence to support his position.  End result is a win for him and a much smaller tax bill.

If I was doing TV or Radio ads, I’d have a legitimate reason to say my client paid ‘pennies on the dollar’ based on the results, but what happened here?  Working diligently with my client, we put together figures to support his position, and this could have been done when the IRS first sent letters back in the spring.  Any tax preparer who practices before the IRS should have been able to do something similar.  To me, this was ‘normal work’, nothing spectacular.

Not all cases are this simple – often tax debt is caused by not paying taxes, not realizing additional tax may be owed (like on premature withdrawals of pension monies), or tax fraud.  Those cases are much more complicated and usually warrant professional help.

greedy_handSo if you are in a situation where the IRS is knocking on your door, don’t panic & look at your situation – if you need help with things, that’s fine but don’t fall prey to those deceptive ads you hear.  Contact an accountant / tax preparer who can go before the IRS (not everyone does this) and discuss your situation and figure your best course of action.

I welcome your comments & would love to hear from you.  Please fill in the response 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

Friend us on FaceBook here.
Connect on LinkedIn here.