How to Find a Tax Attorney and When You Need One

Staff Writer - Angela
May 14, 2018
How to Find a Tax Attorney and When You Need One

When you have issues with the IRS, you need support — a professional who can advocate for your best interests. While a certified public accountant (CPA) can help with most types of tax problems, certain complex issues require in-depth knowledge of the extensive, frequently changing tax laws. In these situations, you should find a tax attorney in your area who has the expertise you need to protect your best interests and successfully resolve tax debt and related problems. Tax attorneys can also help with complex matters such as international trade taxation and advantageous business structures.

Reasons to Hire a Tax Attorney

A CPA handles standard tax matters such as planning, preparing, and filing your returns. While he or she is well-versed in these areas, this professional doesn’t necessarily have the same in-depth knowledge of and training in tax law as a specialized attorney. Scenarios in which you may need to find a tax attorney to help with your IRS issues include, but are not limited to, the following:

  • If you are accused of tax fraud or a related crime. This is a scenario in which you need to find a tax attorney for legal assistance. A tax attorney abides by the concept of attorney-client privilege. This means that the information you divulge to your attorney is confidential and he or she will not be compelled to testify against you before the IRS or in court. Tax evasion and tax fraud carry steep penalties that include expensive fines and even jail time in the majority of cases, so it’s important to have a qualified attorney in your corner if you are facing these charges.
  • If you owe money to the IRS that you can’t afford to pay. A tax attorney has an expansive knowledge of the IRS debt relief programs you may qualify for and can help you negotiate a settlement with the IRS. This may include an installment payment plan or an offer in compromise, in which the IRS agrees to settle the debt for less than the amount you owe. He or she can also help you claim hardship status, which means the IRS no longer attempts to collect the tax debt because you are unable to pay it. Because it can be difficult to qualify for these programs, you can find a tax attorney to work directly with the IRS on your behalf.
  • If you expect to leave a substantial estate when you pass away. In this scenario, the estate may be subject to taxation that will impact your heirs. For the 2017 tax year, estates exceeding $5.49 million are subject to up to a 40% estate tax. However, find a tax attorney to help you minimize your estate tax while still passing your assets along to your descendants and prevent funds and property from a large tax burden.
  • When you’re starting a business. It’s important to choose the most advantageous tax structure for your specific business situation. Because there are a variety of business entities and each is taxed differently. Find a tax attorney to help you sort out the particulars and decide whether it’s best to form a corporation, limited liability company, partnership, sole proprietorship, or another type of structure. Tax attorneys have the expertise to evaluate all the tax ramifications of each entity and make a recommendation.
  • If you are involved in international business affairs. A tax attorney can assist you with contracts and tax issues if you are involved with international business matters.

Situations in which you should absolutely find a tax attorney and should not attempt to resolve your tax debt on your own include those when:

  • You owe $100,000 or more in back taxes.
  • You own your own business or are self-employed.
  • An IRS Revenue Officer has been assigned to your case.
  • You have been accused of a tax-related crime.
  • Your tax situation is very complicated.
  • You feel intimidated when speaking with IRS representatives or are unable to clearly explain the particulars of your situation.
  • You have received income that has not been reported to the IRS.
  • You own foreign bank accounts or other assets that have not been disclosed to the IRS.
  • You have valuable assets and do not want them to be seized during the tax collection process.

How to Find a Tax Attorney in Your Area

If you already work with related professionals, such as another attorney or a certified public accountant (CPA), ask them for referrals to a tax attorney they trust and have successfully worked with in the past. Alternately, you can seek recommendations from your local bar association.

Tax attorneys must be registered with the state bar and complete ongoing education about the tax code to maintain this registration. In addition to a law (Juris Doctorate) degree, they may also hold a Master of Laws in taxation. Some tax attorneys are also CPAs, which allows them to specialize further. Before agreeing to work with a local tax attorney, make sure he or she has expertise in the specific area you need help with. Most attorneys will offer a free or low-cost consultation. If they aren’t able to help you, they may be able to refer you to another lawyer who has the knowledge you need.

When hiring a tax attorney, ask the following questions:

  • How long have you been in business?
  • Do you practice in other areas beyond tax law?
  • What areas of tax law do you specialize in?
  • Have you ever handled a case like mine before, and what was the outcome?
  • How do you assess the particulars of my situation?
  • What specific factors of my case work for me and against me?
  • What course of action would you recommend in my case?
  • What is your billing structure?
  • How much do you estimate my case will cost?
  • Do you have a clear policy about communicating with clients? How often and what method should I expect to hear from you?

You may want to consider hiring a tax attorney who provides a satisfaction guarantee for his or her services. That doesn’t necessarily mean that you’ll get your money back if you don’t win your tax case. Rather, it means that if you are not happy with an aspect of the service provided, such as the level of communication with your attorney or the steps that he or she takes to resolve your case, measures will be taken to make it right or you will be given a full refund. This guarantee can protect you from unscrupulous tax relief agencies that do not have the authority to help with your case and instead plan to take the money and run.

The Cost of Hiring a Tax Attorney

Your local tax attorney may charge either a flat fee or an hourly rate, both of which vary depending on where you live, what you need help with, and other factors. In general, most hourly rates average between $200 and $400 per hour, although tax attorneys at the top of their field can charge an even higher hourly rate. A flat fee is a project-based charge that usually applies only to the most basic legal needs since it doesn’t change no matter how many hours the lawyer spends on your case. It is much more common for tax attorneys to charge an hourly rate rather than a flat fee. The average costs for common services performed by this type of attorney are as follows:

  • Creation of an installment agreement: $1,000
  • Penalty abatement: $1,750
  • Simple IRS audit: $2,750
  • Offer in compromise negotiation: $5,000
  • Complex IRS audit: at least $5,000
  • IRS appeals representation: $6,250
  • Tax court litigation: at least $10,000

Prices vary dramatically depending on your geographic area, the complexity of your case, and the credentials and years of experience of the attorney you hire. While you should expect to pay a retainer for the services of a tax attorney, avoid a lawyer who asks you to pay the entire fee upfront.

How a Tax Attorney Can Help Resolve IRS Debt

Although owing money to the IRS can be a difficult situation, find a tax attorney to help you negotiate an affordable settlement. While taxpayers have the right to work with the IRS to settle their own tax debt, an attorney has the knowledge and experience you need to increase your chance of qualifying for IRS debt relief programs.

To determine whether you are eligible for an installment payment plan, an offer in compromise, or classification as unable to pay due to hardship, the IRS analyzes your reasonable collection potential (RCP). You’ll need to submit IRS Form 433-A, which asks for detailed information about your finances, including investments, assets, cash on hand, income, available credit, and existing debts, along with your basic living expenses and anticipated future income.

A tax attorney can help you develop a reasonable offer in compromise that is likely to be accepted by the IRS. In most cases, you must make an offer to settle your taxes for an amount equal to the value of your assets and your future income, which is your reasonable collection potential.

Tax Relief Agency vs. Tax Attorney vs. CPA/EA

If you have substantial tax debt that you can’t pay, both a tax attorney and a tax relief agency can offer assistance. In fact, many tax relief agencies have specialized attorneys on staff. The key is to separate legitimate agencies from those that are simply seeking to separate you from your money.

Choose a tax relief agency that has either a CPA, an enrolled agent, and/or a tax attorney on board. An enrolled agent, or EA, is a CPA with at least five years of experience and special certification to represent taxpayers before the IRS. Enrolled agents must also pass an exam. Many EAs previously worked for the IRS and, therefore, have an intimate knowledge of its rules, regulations, and procedures. If an agency does not have at least one of these professionals on board, it does not have the authority to negotiate with the IRS on your behalf and should be avoided.

After you’ve checked the credentials of the principals of a tax relief agency, read online reviews to find out about the experiences other customers have had. You can also check their reputation using resources such as the Better Business Bureau. If an agency has few reviews or online ratings, it could be a red flag that they are a fly-by-night organization that won’t actually be able to help you with your tax problems.

Using the services of a tax relief agency could be an appropriate route for you to take if:

  • Your wages have been garnished or your bank account levied to collect your tax debt, especially if you are no longer able to meet your basic living expenses as a result of these collection actions.
  • A federal tax lien has been placed on your home or car.
  • You are liable for tax penalties incurred by your spouse and want to explore innocent spouse relief because you did not know about these unpaid taxes.
  • You own a business and your payroll taxes are past due.

In all these scenarios, however, a tax attorney may also be able to assist, whether or not he or she is associated with a tax relief agency. Choosing the right tax professional for your needs can ultimately save you time and money. If you do not expect your tax issue to require litigation support, hiring a tax attorney might be beyond the scope of what you need. On the other hand, a CPA is most appropriate when your tax needs are standard, such as when you need to plan to pay your estimated quarterly taxes or file your returns correctly. An EA can represent you before the IRS and might be an appropriate choice if you are being audited. Find a tax attorney that’s qualified whenever you need extensive tax law knowledge.

Whether you are starting your own business, owe back taxes, or have another complicated tax matter that needs attention, a local tax attorney can provide peace of mind by advocating on your behalf with the IRS and providing consultation that can help you make the right choices for your continued financial success. At Solvable, we are here to help answer any tax debt relief questions you might have.

 

Need help with your Tax Debt Relief?
Here are the top Tax Debt Relief companies

Tax Tiger
844-826-4990
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Oxford Tax Partners
855-999-3850
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Stop IRS Debt
855-906-2882
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