Filing taxes can be daunting, especially with complex issues.
Hiring a tax attorney can help, regardless of your financial situation.
They assist in avoiding problems, addressing concerns, and can communicate with the IRS for you, saving time and frustration.
Let’s discuss what tax attorneys do and who should consider their services.
What is a tax attorney?
A tax attorney specializes in tax laws and often focuses on specific tax-related areas like state, local, personal, corporate, international taxes, and more.
Tax attorneys can work in various organizations, law firms, government agencies, or tax courts.
What does a tax attorney do?
Tax attorneys provide various services depending on their specialization, including guiding clients through complex tax processes, monitoring tax law changes, strategizing transactions, and representing clients facing tax issues.
Some services they offer include helping clients file taxes, informing them about pending tax legislation, structuring tax-advantaged estate plans, facilitating transactions, representing clients in audits or litigation, and communicating with the IRS.
Tax attorneys, unlike CPAs, have passed the bar exam and are licensed lawyers, with a deeper understanding of tax laws and liabilities.
When Should I Hire a Tax Attorney?
If you have outstanding tax debt with the IRS
Outstanding tax debt can lead to serious consequences, such as wage garnishment, liens, or even criminal charges.
These attorneys can communicate with the IRS, negotiate a settled debt balance (Offer in Compromise), and develop an installment plan to satisfy the debt. Having a proactive IRS tax lawyer can help avoid litigation and garnishment.
If you want to dispute a tax bill
Even with good record-keeping and consulting a CPA, you may face an audit or unexpected tax bill. In such cases, hiring a tax attorney can help identify errors, provide guidance, and represent you in dealings with the IRS. They can also assist in developing strategies for resolving the deficit.
If you are making a big business decision
The structure and management of your business can impact taxes. Hiring a tax attorney can provide guidance, estimate tax liabilities, and suggest strategies for tax reduction, preventing costly errors and unexpected bills.
If you are making a large investment
For significant investments like inheritances or lottery winnings, a tax attorney can advise on tax-efficient investment strategies to maximize returns and minimize tax implications.
If you have a large estate
Hiring a tax attorney can help preserve a large estate by advising on strategies to reduce estate and inheritance taxes, like creating a family trust or maximizing annual gift exclusions for loved ones.
How to Choose a Tax Attorney
When selecting a tax attorney, follow these tips to improve your chances of finding the right fit:
Evaluate your situation. Before hiring a tax attorney, clarify your specific needs. Determine whether you require assistance with small business tax reduction, estate planning, or IRS debt resolution, and choose an attorney specializing in your area of concern.
Know your budget. Tax attorneys and firms have varying pricing structures, so be aware of your situation’s complexity and carefully assess the costs associated with the attorney(s) you’re considering. Costs can vary significantly.
Ask how they bill for services. Tax relief agencies may offer flat-rate packages, while tax attorneys may charge by the hour. Understanding the billing structure and service expectations is crucial.
Find out if a retainer is required. Check with your tax attorney about upfront retainer requirements and payment arrangements to ensure affordability.
Ask around. Seek recommendations from friends, family, and colleagues, and check online review sites when searching for a suitable tax attorney within your budget.
Do your research. Check your state’s bar website for any filed complaints or disciplinary records against the tax attorneys on your shortlist.
Hiring a tax attorney or tax relief firm may be a significant investment, but it can provide valuable benefits, such as resolving tax debt, optimizing business tax savings, or structuring your estate for tax advantages.