Illinois woman's work in Indiana creates cross-state tax return mess
CHICAGO (CBS) – There's a saying that there are two sure things in life: death and taxes.
Taxes were even more painful for a suburban woman whose fight over her 2020 return wages on. She's an accountant and hired a tax professional, but she still got stuck in a messy battle.
Hailey Veath is a fiancée, dog mom, and, for the purposes of this story, a proud graduate of Ball State University in Indiana. She even earned a master's degree there, earning a few thousand dollars helping professors.
"I filed my taxes in 2021 for tax year 2020," she said. "All was, you know, hunky dory [and] filed in Indiana."
The trouble was Veath's tax return used her permanent Illinois address. In the eyes of the Land of Lincoln, she was a resident in Illinois, not in Indiana, which is the only place she filed state income taxes that year.
"It was just disheartening and frustrating to say the least," Veath said.
She was talking about a notice and others that followed from the Illinois Department of Revenue demanding tax payment even though she had already paid Indiana. Veath hired H&R Block to do her taxes that year, and the preparer offered to respond to Illinois' scary-sounding mailings.
"She said she would make it go away, and I trusted her," Veath said.
Letters from the H&R Block preparer did nothing to change the Illinois taxman's mind. So Veath shelled out more than $800 in taxes and penalties and interest in December of 2023, even though she already paid Indiana.
"Then I reached out to CBS 2 to say, 'Hey, can somebody look into this?'" Veath said.
CBS 2 went straight to the Illinois CPA Society, which shared Veath's returns with independent tax experts, including Joe Bigane.
"The person who prepared the original return used the Illinois address on the original return, and that should have triggered a question of, well, why am I not filing an Illinois tax return?" Bigane said.
Reporter: "This woman studied accounting. She hired a tax professional and it still was done in error. What does that say about our tax code?
Bigane: "Well, first of all, the whole concept of residency is difficult."
Bigane said even if Veath earned the money in Indiana, she couldn't just ignore the Illinois Department of Revenue because her home was in Illinois.
"The preparer incorrectly assumed that she only had to file an Indiana return and did not, in fact, prepare an Illinois return," Bigane said.
Bigane said there are certain criteria that determine residency for tax purposes: Where do you vote? What driver's license do you have?
"It's a typical situation," he said.
It's also a situation that applies to people who send their children to school out of state or someone who works in Indiana or Wisconsin but lives in Illinois.
"This could happen to you too," Veath said, warning others.
Veath still lives at home and is saving for a down payment on a house.
"I finally felt like I had somebody on my side," she said.
Bigane offered to help Veath fix her 2020 tax mess, and when CBS 2 reached out to H&R Block, they got in touch with Veath, too. The tax giant decided to stand behind its guarantee, corrected her tax return, and paid her back for the interest and fees.
"At least something back in my pocket," she said.
She said the money was better in her pocket, especially with an upcoming wedding to Zachary, her fiancee, to pay for, not to mention three dogs to feed.
The tax preparer could not say why it took CBS 2's involvement to get them to help Veath in the first place. Despite H&R Block's promise to help Veath two weeks ago, the amended return was not yet complete, and she has not received the refund check.
