You should hire a tax attorney in situations such as unpaid debts, active IRS investigations, and complex tax compliance issues for your business. A tax attorney specializes in tax planning and proper representation of clients in all tax matters involving the IRS and other related state-level agencies. Knowing when to hire a tax attorney could save you a lot of money and even keep you out of jail.
If you’re dealing with a problem that involves both taxes and legal issues, our experienced tax lawyers can help you resolve it. Book a free consultation with Victory Tax Lawyers today to get started.
In this blog, we will cover the role of a good tax attorney, the critical moments to hire one, and how to choose the right one for your financial situation.
When Should You Hire a Tax Attorney?
You should hire a tax professional whenever you are facing a tax dispute with the IRS or any other associated agency. Working with a reputable legal counsel will give you a fighting chance and ultimately protect your rights. Here are some situations when you can hire a tax attorney:
Facing an IRS Audit or Investigation
When the Internal Revenue Service conducts an audit, it looks closely at your financial records to ensure your tax return is accurate and that you are in compliance with tax laws. While some IRS audits are routine, others can uncover discrepancies that lead to penalties, interest charges, or even accusations of fraud.
When you have a tax attorney during an audit, they ensure that your rights are protected throughout the process. They can provide legal representation, communicate directly with the IRS on your behalf, and prevent you from making incriminating statements. The stakes are even higher when faced with an IRS investigation.
This means that the taxpayer is suspected of intentional wrongdoing, such as underreporting income, hiding assets, or committing tax evasion. In this case, a qualified tax attorney becomes indispensable because they can develop a legal strategy, negotiate with prosecutors, and work to minimize consequences or even prevent criminal charges from being filed.
Owing a Large Amount of Back Taxes or Penalties
If you owe a significant amount in back taxes, an IRS tax attorney may be able to help you file an offer in compromise, establish payment plans, or otherwise reduce the amount you owe. Whether by examining your finances to reveal something the IRS missed or by directly negotiating with the tax authorities, an attorney can aid in several ways.
Tax Evasion or Fraud Allegations
Tax evasion and tax fraud are serious matters that may lead to significant fines, criminal charges, or even prison time. Because tax attorneys have an in-depth understanding of tax law, they can help you build a strong defense and represent you in court if needed.
Handling Complex Business Taxes
An IRS tax lawyer can help business owners avoid payroll tax issues and address any that arise. Businesses spanning multiple states and countries face a web of complex tax laws and regulations, and a knowledgeable attorney helps ensure compliance. This will potentially help you avoid devastating legal and financial consequences.
Dealing With International Tax Issues
If you have foreign income or engage in cross-border business transactions, a tax attorney can help you stay compliant with the Foreign Account Tax Compliance Act and ensure your Report of Foreign Bank and Financial Accounts is filled out and filed correctly.
What Does a Tax Attorney Do?
A tax attorney is a lawyer whose practices focus on tax law. They provide a range of services, including:
- Representing clients facing tax-related legal issues
- Helping resolve tax disputes with the IRS
- Assisting with complicated tax planning
- Helping businesses and individuals ensure compliance with tax law
- Negotiating with the IRS to lower a client’s tax liabilities
- Offering legal advice to those being investigated by the IRS
- Helping resolve tax liens and tax levies
If you’re looking for basic tax planning and financial planning, or you want to file your taxes, a certified public accountant (CPA) or tax preparer can help. However, if you’re dealing with tax-related legal issues or need to negotiate directly with the IRS, a tax attorney is almost always the right choice.
Why Should You Hire a Tax Attorney?
When dealing with the IRS, it’s smart to have someone on your side who has a deep understanding of tax law. Working with a tax attorney is often beneficial because their knowledge of the law can help you maximize savings without running afoul of the law.
They offer an attorney-client privilege, which means that whatever sensitive financial information you share with them is safe and cannot be disclosed or used against you by a third party. Most prominent tax attorneys have had several years of experience working and dealing with the IRS, and so, they can represent you effectively.
How to Hire an Experienced Tax Attorney
You shouldn’t just hire the first tax attorney you find. To ensure you protect your interests and find the right attorney for your needs, take the following steps before making your final decision.
- Research and Shortlist Potential Attorneys: Start by looking for tax lawyers who work within your jurisdiction and offer the specific services you need. Evaluate each lawyer’s track record to make sure you’re confident in their ability to represent you.
- Verify Qualifications and Licenses: Before you start scheduling consultations, take some time to verify that each tax attorney has the license and other qualifications they claim to have. Your state’s bar association should have an online lookup tool to help with this step. Also, look out for client reviews on similar cases.
- Schedule Consultations: Most tax attorneys offer free consultations. At your consultation, listen closely to determine whether each lawyer has a clear plan of action for your case. A consultation can also help you get a feel for each attorney’s personality and communication style and see if they’re someone you would feel comfortable working closely with.
- Evaluate Costs and Make Your Decision: During each consultation, make a note of each attorney’s fee structure and total cost. Some law firms bill by the hour, and others may charge a flat fee. Before agreeing, compare the costs and benefits of working with each attorney and make a final selection.
How Much Does a Tax Attorney Cost?
Tax attorneys charge varying amounts depending on their experience, location, and the particular issue they are helping you with.
Many tax lawyers who bill hourly charge $200 to $400 per hour, but that amount may be greater for a very experienced lawyer or an in-demand firm. Some lawyers may charge a flat fee of a few thousand dollars (or sometimes more) to perform a particular service, like filing an offer in compromise.
Tax Attorney vs CPA vs EA: Which Is Right for You?
Choosing between a Tax Attorney, CPA, or Enrolled Agent (EA) can feel confusing. Each brings special training, strengths, and pricing, depending on what you need. Here’s a breakdown of their differences so you can figure out which one fits your tax situation best:
| Situation / Issue | Tax Attorney | CPA | Enrolled Agent (EA) |
|---|---|---|---|
| IRS Audit | Can represent you in court and negotiate | Limited to advice; cannot represent in court | Can represent before the IRS, but legal advice is limited |
| Back Taxes / Penalties | Can negotiate settlements and offer in compromise | Can help calculate taxes owed | Can handle IRS payment plans |
| Tax Fraud / Criminal Investigation | Full legal defense | Cannot represent in criminal cases | Cannot represent in criminal cases |
| Complex Business Taxes | Can handle multi-state or international tax law | Can handle reporting, planning | Can represent before the IRS |
| Routine Tax Filing | Not ideal | Helps in preparing and filing taxes. | Prepares and files taxes |
Need Assistance From a Qualified Tax Attorney?
If you need tax-related assistance that goes beyond basic preparation and filing, including negotiating with the IRS, or facing a tax audit or investigation, it’s time to hire a tax attorney.
When you’re dealing with complicated tax problems, it’s important to seek help as soon as you can. Waiting can jeopardize your finances, your reputation, and even your freedom.
If you’re looking for the best IRS tax attorney, the team at Victory Tax Lawyers is here for you. Contact us now to resolve your tax-related legal issues.
FAQ
This FAQ answers common questions about hiring a tax attorney, what they can do for you, and the key reasons to hire a tax attorney when facing IRS problems.
Why Do People Hire Lawyers When Dealing With the IRS?
A tax lawyer can help you understand tax laws, your rights as a taxpayer, and how to handle IRS letters, audits, or back tax issues. Having someone who knows the system helps you avoid costly mistakes in any tax matter.
Do You Need a Lawyer to Negotiate With the IRS?
You are not required to have a lawyer when talking to the IRS, but having one can make a big difference. Tax attorneys can explain your options, help set up payment plans, and negotiate settlements
Can a Tax Attorney Represent Me in Front of the IRS?
Yes. A tax attorney can speak to the IRS on your behalf. This means you don’t have to deal with IRS agents directly; they handle the calls, paperwork, and legal details for you, ensuring compliance with tax laws.
What’s the Difference Between a Tax Attorney and a CPA?
A CPA focuses on preparing tax returns and keeping your books in order, while a tax attorney handles the legal side, such as audits, disputes, tax court cases, or serious IRS problems. If you’re unsure which one you need, think about this: a CPA helps with numbers, but a tax attorney protects you legally when things get serious.
When Is It Too Late to Hire a Tax Attorney?
It’s never too late to hire a tax attorney. Even if you have received an IRS notice or the collection process has started, a tax attorney can still step in to offer you a way out. However, the sooner you get professional help, the more options you’ll have for resolving the problem.
How Quickly Should I Hire a Tax Attorney if I Owe Back Taxes?
You should reach out as soon as you know you owe a tax debt. IRS penalties on unpaid taxes grow over time, and waiting can make things worse. Acting early gives your attorney more time to find the best solution, like stopping wage garnishments or setting up payment plans.
Can a Tax Attorney Reduce My IRS Penalties?
Yes, in many cases. A tax attorney can ask the IRS to remove or lower penalties through programs like penalty abatement or by proving reasonable cause. They know the rules and what the IRS looks for when deciding whether to grant relief.
Why Hire a Tax Attorney for a Tax Audit?
An IRS tax audit already shows that the IRS does not believe the facts in your tax return. Treating this with levity can lead to serious consequences, including criminal investigation. As such, a tax attorney can help you analyze the case, protect your rights, and help you get the best possible outcome from the audit.
When Should I Get a Tax Attorney?
You should get a tax attorney the moment you observe a serious tax issue with the IRS that a CPA may not handle.
