When Do I Need A Tax Attorney?
A tax attorney is a lawyer who specializes in helping clients navigate complex tax laws. You may need a tax attorney to deal with issues such as disputes with tax authorities, tax debt relief, business planning or estate planning.
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- Updated: September 20, 2022
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What Is a Tax Attorney?
Tax attorneys assist clients in navigating the complexities of U.S. tax law. They help ensure that clients comply with state and federal tax regulations while still taking advantage of any deductions or credits that are available to them. A tax attorney can also help you resolve a legal dispute with a tax authority.
Depending on your situation, you’ll want to go to either a law firm or an accounting firm to hire a tax attorney. Tax attorneys at law firms generally deal more with tax controversies and can represent clients in a legal dispute. Accounting firms employ tax attorneys to offer tax advice for clients, but not necessarily to represent them with a tax dispute going to court.
It’s important to understand the difference between tax attorneys and other tax professionals like certified public accountants (CPAs). The ability to work with the legal side of taxes sets tax attorneys apart from CPAs or other tax professionals. If you want help filing your taxes and making sure you get the biggest refund possible, working with a CPA will likely suit your needs.
A helpful way to think of the difference between CPAs and tax attorneys is that a CPA specializes in preventing tax issues before they arise, but a tax attorney is best at helping you resolve tax issues that have developed.
When Should You Hire a Tax Attorney?
It’s important to consult a professional on many tax issues, as not dealing with them properly can have serious consequences on many aspects of your personal finance. The average taxpayer probably won’t require the expertise of a tax attorney to file their tax returns each year. However, there are several situations where having a tax attorney in your corner can be essential.
A tax attorney can help you when tax issues arise that are more complex than what you or your accountant can handle. Tax attorneys are equipped to handle a wide range of tax issues for their clients.
- Audit representation
- Criminal defense
- Installment agreements
- Offers in compromise
- Tax penalty relief
- Tax lien and tax levy assistance
- Wage garnishment removal
If you have complex tax relief issues or cases with legal ramifications, hiring a tax attorney may be the best option to resolve the disputes.
A “tax dispute” can refer to an audit, investigation, appeal, collection motion or other disagreement related to taxes. Tax attorneys have specialized knowledge in dealing with the intricacies of tax law and can legally represent clients in court. If you’re dealing with a tax dispute, working with a tax attorney can help even the playing field between you and the state or federal tax authorities.
In 2020, the IRS audited about one out of every 166 individual tax returns. This means that overall, the chances of being audited that year were roughly 0.6%. Being audited by the IRS does not necessarily mean you have done something wrong, but you do have the right to be represented by an attorney during the audit process.
If you end up disagreeing with the results of the audit, it’s a good idea to have a tax attorney to help you prepare an appeal. A tax attorney can help you prepare your case and represent you in court if necessary.
If you owe more money to the IRS than you can pay back at once, you may be able to negotiate a repayment plan to pay back your taxes over time. A tax attorney can help you negotiate with the IRS to get a lower monthly payment while paying back what you owe in a reasonable amount of time.
Some taxpayers worry that the burden of tax debt is so high that they can never pay it off. If you can’t pay back your tax debt, a tax attorney may be able to help you negotiate an offer in compromise with the tax authorities.
An offer in compromise means that your attorney makes an offer to the IRS for you to pay some of your tax debt instead of the full amount. To make this offer, you must prove that you cannot pay your debt. A tax attorney can help you gather the necessary evidence to build your case.
When tax issues are not resolved, the IRS may take further actions. They can garnish your wages — taking a portion of your paycheck to pay what you owe. State and federal tax authorities can also place liens on your property, which means they have a legal claim to the property, making it impossible to sell.
In extreme situations, tax collectors can seize your property or accounts in what’s known as a tax levy. If any of these actions are taken against you, it’s wise to consider hiring a tax attorney to defend you.
Starting, purchasing or selling a business is a major financial decision, and there are complicated tax issues that can arise throughout the process. While business lawyers may have knowledge in the area, working with a dedicated tax attorney can ensure that you fully comply with federal and state tax laws to avoid penalties.
Business owners wear many hats, and learning the ins and outs of business tax law can be extremely time consuming. Hiring a tax attorney is the best way to protect you and your business from a costly error.
If you’re planning to leave money to your heirs in your will, you may run into complicated tax implications. Estate taxes can take a large chunk out of the inheritance you plan to leave behind.
A tax attorney can help you minimize the impact of taxes on your estate. Some tax attorneys specialize in estate planning, making sure that their clients have the wisest strategy for moving assets to their heirs.
What Should You Look For In a Tax Attorney?
There are a few qualifications you should look for when deciding to hire a tax attorney. As with any type of lawyer, your tax attorney should hold a Juris Doctor law degree and be a member of your state’s bar association.
You may decide to look for an attorney with a Master of Law (LL.M.) degree in taxation. This is an additional degree that law school graduates can pursue after passing the bar exam to gain specialized knowledge in tax law.
Besides these qualifications, it’s important to work with an attorney who has experience dealing with your specific issues. When you meet with the attorney, ask about what kind of tax work they do, whether they usually work with businesses or individuals and how much experience they have with your specific needs.
What Does It Cost To Hire a Tax Attorney?
Most tax attorneys charge an hourly rate for their services, and the cost of that hourly rate can vary based on your location and the attorney’s level of experience. On average, you can expect to pay between $100 and $400 an hour for a tax attorney’s services.
Some attorneys also charge a retainer fee or a contingency fee. A retainer fee is essentially a down payment on the attorney’s services that the client pays upfront. Contingency fees are a percentage of the damages awarded at the end of the case, and are charged only if the attorney wins the case.
If you can’t afford a tax attorney, you may still be able to get help with tax issues from a qualified advocate. The federal government’s Taxpayer Advocate Service protects taxpayers’ rights and can help resolve disputes between taxpayers and the IRS.
You can find out if the TAS can help you with your tax issues by using the free qualifier tool on their website.
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9 Cited Research Articles
Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.
- Accounting.com. (2021, December 8). Tax Attorney Career Overview. Retrieved from https://www.accounting.com/careers/tax-attorney/
- Caron, P.L., Kowal, J.M. & Pratt, K. (2010, November 12). Pursuing a Tax LLM Degree: Why and When? Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1577966
- Field, H. (2019, June 13). An Introduction to Tax Careers for J.D.s. Retrieved from https://www.americanbar.org/groups/taxation/publications/abataxtimes_home/19jun/19jun-ylc-field-an-introduction-to-tax-careers-for-jds/
- Karp Law Firm. (n.d.) Florida Tax Planning Attorneys for Wealth Transfer. Retrieved from https://karplaw.com/practice-area/florida-estate-planning/wealth-transfer-and-tax-planning/
- LawInsider.com. (n.d.) Tax Dispute Definition. Retrieved from https://www.lawinsider.com/dictionary/tax-dispute
- Taxpayer Advocate Service. (n.d.) About Us – Taxpayer Advocate Service. Retrieved from https://www.taxpayeradvocate.irs.gov/about-us/
- Williams, G. (2018, October 2). Do You Need a Tax Attorney? Retrieved from https://money.usnews.com/money/personal-finance/taxes/articles/2018-10-02/do-you-need-a-tax-attorney
- U.S. Internal Revenue Service. (2017).Offer in Compromise. Retrieved from https://www.irs.gov/payments/offer-in-compromise
- U.S. Internal Revenue Service. (2021). IRS Data Book, 2020. Retrieved from https://www.irs.gov/pub/irs-pdf/p55b.pdf
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