How to Ensure You Hire the Right Tax Attorney

The United States Internal Revenue Code (IRC) has grown to gargantuan proportions since its inception. It’s convoluted, and compliance is a challenge fraught with worrying about doing something wrong. It’s a legitimate concern.

Besides the IRC, there are tax laws on income, estates, capital gains, vice and sin, businesses, employment or payroll, property, import, and gifts.

In the IRS’s press release for their 2018 fiscal year report, they said that their conviction rate was 91.7% — a very high number, and one of the highest of all federal law enforcement agencies. However, they also revealed that the criminal investigation unit’s agent number was the lowest since the early 1970s. The IRS is traditionally underfunded and overworked, and the trend looks like it will continue. The IRS wants to be busy with the very biggest tax cases, so they’re more than ready to negotiate with your tax lawyer.

The right tax attorney can provide expert guidance and negotiation skills. Here is how to find the right one for your situation.

The Details about Tax Attorneys

Of course, there are situations where hiring an accountant or tax preparer can be appropriate, but there are also benefits that only tax attorneys can provide. Unlike accountants or tax preparers, tax attorneys are skilled negotiators equipped with legal expertise in the field of finance and taxes. They also have the benefit of attorney-client privilege.

Attorney-client privilege is of paramount importance in legal dealings. Your lawyer may not release any information about your case without your permission. An accountant or tax preparer cannot offer you that benefit.

Also, unlike an accountant or tax preparer, a tax attorney is there to handle complex legal issues specifically associated with your tax situation. You can hire one after a problem occurs, or you can hire one to help you avoid problems in the first place.

Other benefits of hiring a tax attorney include:

  • Extensive knowledge of the tax code.
  • Having all documentation completed and filed accurately and on time.
  • You have someone standing between you and the IRS.
  • Your assets are protected to the extent of the law.

A good tax lawyer will have completed a bachelor’s degree in finance or accounting, then obtained advanced training in the law. Some earn a master of laws degree (LL.M) in taxation or certification as a tax law specialist.

The attorney you select must have completed a law degree (a Juris Doctorate), passing the state bar exam, and becoming licensed to practice in your state. Also, the attorney must have admission to federal courts if you require it.

A tax attorney explains:

  • What you can do and what you cannot.
  • The requirements of your case.
  • The expected outcome.
  • An estimate of the cost of services for your specific needs.

Make sure any tax lawyer you retain meets these minimum standards.

Why Do You Need a Tax Attorney?

There are a variety of situations where you might need a tax attorney. Some are more serious than others. You may need to retain a lawyer for these reasons:

  • Tax relief if you are unable to pay the full amount.
  • Criminal tax issues.
  • To remove a lien or avoid garnishment or having your accounts frozen.
  • To represent you in an audit.
  • For starting, buying, or selling your business.
  • For estate planning to protect your business assets when you die.
  • When engaging in international business.
  • If you plan to bring suit against the IRS.

The truism that anyone representing himself has a fool for a lawyer is especially true when facing the IRS. Your tax attorney is a skilled negotiator with experience going up against the Internal Revenue Service and state taxing agencies.

One last benefit of tax attorneys is that they are emotionally distanced from the problem, making it easier for them to clarify and defend you.

When to Seek the Assistance of a Tax Attorney

The length of the tax law suggests there is also a lengthy list of sub-fields of tax law. Some tax lawyers specialize in one or more of these areas.

Audits

As mentioned above, if the IRS is auditing you, you may want the support of an attorney with experience in preparing for audits. A lawyer can help you throughout the audit process, ensuring everything is covered without creating additional penalties or debt.

If the audit determines you owe the IRS compensation or back taxes, legal assistance may lower your debt load through penalty abatement or negotiating a payment plan.

Business Entities

When starting up a new business, a tax attorney can help you determine the financial structure best suited to your company. If you are not operating under a sole proprietorship, you should seek assistance in filing as a limited liability company (LLC), C-corporation, or S-corporation. Even if you are setting up a partnership, engage a lawyer to set up the contract.

Each of the business entities offers different tax benefits and disadvantages. For example, an LLC or S-corporation allows business income, losses, and deductions to “pass-through” to the shareholders. Each shareholder then files the information with his or her individual income tax return. The benefit is that private assets are protected from business debts.

Other Business Operations

The larger the business, the more complicated the tax profile grows. If you hire staff, have a brick-and-mortar presence, or do business internationally, an attorney experienced in business tax law can ensure you do everything correctly.

Federal and state tax laws for businesses are complex and often integrate with other business law. A skillful lawyer can help you comply with tax law as it changes as well as negotiate with the IRS when necessary.

You will need to withhold payroll taxes for employees. Paying the taxes late or by the wrong amount can lead to an audit, as will skipping the payment altogether. You cannot negotiate payroll tax debt, and it will not be wiped away by bankruptcy. Your attorney can explain the rules and help you set up the proper bookkeeping policies.

Tax Court

If you wish to dispute a tax assessment levied by the IRS, you may do so in tax court. If the amount is relatively small, you may be able to handle it yourself. However, if the amount is significant or you don’t want to face the IRS lawyers on your own, retain a tax attorney to represent you.

Estate Planning

You may wish your business to continue after you are gone. Tax attorneys help with estate planning and, later, with probate. They can set up wills and trusts, and provide other guidance to protect against high taxes.

Criminal Tax Issues

Perhaps you made unfortunate choices and are now facing the court and prison. An attorney with tax and trial experience is your bulwark against a taxing agency with extensive legal power. In addition to the IRS’s high conviction rate, they prevailed in roughly eight of ten cases from 2014 to 2016, and the defendants went to prison. You need help.

The Characteristics of the Right Tax Attorney

Beyond the educational credentials and experience, selecting the right tax attorney for you requires a little more research on your part.

You want someone who understands the specific areas where you need help. You want an attorney who stays up to date on ever-changing tax and business law. You want one who can apply relevant precedent to your situation. However, there is more to consider.

  • Do you have a good rapport with this person and the law office?
  • Does the attorney listen to you and answer all your questions?
  • Is the attorney readily available?
  • Does the law office charge for phone calls or refuse to do phone consultations?
  • Is the estimate set only after reviewing all relevant tax documents?
  • Is the attorney assertive and confident in demeanor?
  • Can you afford the rates charged?

The attorney can answer some of these questions. To answer the rest, obtain a list of references and contact them. Find out from others who hired this law office whether it could be a good fit for you. Don’t skip this essential research. Tax issues are serious. It would be best if you had someone you can work with comfortably over the long haul.

Conclusion

U.S. tax law is convoluted, to say the least. If your tax situation grows beyond simple tax preparation, or if the IRS or state tax agency has contacted you about a problem, retaining a tax attorney is your best hedge against legal disaster and the many penalties of tax crimes. Attorneys know how to set up and prepare your taxes to protect your assets, and how to negotiate tax relief.

If you are starting, selling, or buying a business, a tax attorney protects your interests during each phase of the transaction. He or she also protects your interests after you have died by helping you with estate planning during your life.

If you are under criminal investigation, an attorney is a requirement. Find one who understands the area of tax law in question to negotiate for you. Moreover, you enjoy attorney-client privilege, which you won’t receive from a tax preparer or accountant.

Protect your assets and yourself by finding a tax attorney that has the right experience, is available at the right time, and is the right fit for you.

Jayson Mullin

Jayson Mullin

Jayson Mullin is a partner at Top Tax Defenders, a tax resolution company with over 30 years of experience. They work with the IRS to aggressively help clients with any type of tax relief problems. They also regularly publish articles about tax help on their blog.
Jayson Mullin

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