What Does a Tax Attorney Do?

Andrea Miller
Expert Contributor
Last Updated:
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For some tax situations, a certified public accountant (CPA) is the pro you need to call. More complicated issues typically require the assistance of a tax attorney. A specialized lawyer can advocate on your behalf with legal matters concerning your taxes as well as complex technical matters that require comprehensive and up-to-date knowledge of the ever-changing tax code.

The Role of a Tax Attorney

It’s most important to hire a tax attorney if you have been accused of a crime or owe back taxes that you are unable to pay. For most individuals, the expertise of a tax attorney can help in the following additional situations:

  • If you are engaged in estate planning and expect to leave behind a taxable estate when you die, the tax attorney can advise you on estate-planning strategies to minimize the assets that go to a large tax bill and maximize the amount you are able to leave to your beneficiaries. In most cases, this is an issue if your estate is expected to exceed $5.49 million for an individual or $10.98 million for a married couple; these thresholds typically increase each year.
  • If you’re starting a business, a tax attorney can advise you on the different types of business entities and the tax implications of each, including whether or not you should plan to incorporate. The attorney can recommend the best entity for your specific situation, whether you’re a sole proprietor or planning a partnership.
  • You already have a business and want to determine what you can deduct, how you are taxed as a telecommuter, and other work situations that can affect the amount of taxes you owe.
  • You need advice on foreign taxes or on global business contracts.
  • You are planning to sue the IRS and need experienced representation.
  • You want your tax case to be independently reviewed by the U.S. Tax Court.
  • You are up to date on your taxes but want to learn more about strategies you can use to lower your liability in future tax years.
  • You need help navigating or understanding correspondence or publications you have received from the IRS and how they impact your tax situation. With at least 2,000 IRS forms and documents, many of which are written in legal jargon, a professional advocate can help you get to the bottom of the challenging tax code. Your attorney can help explain the correspondence you receive as well as draft responses and otherwise communicate with the IRS for you. He or she can also identify the many gray areas in the tax code and use this information to your advantage.
  • You have attempted to work directly with the IRS to resolve a tax issue and have not received a timely response. A tax attorney can craft a more direct correspondence that will result in a dialogue with the agency and open the lines of communication. He or she also has a comprehensive understanding of the IRS and can make sure the correspondence reaches the correct department and individual.
  • If you become incapacitated, your tax attorney can be given the power to work with the IRS on your behalf.
  • If you have not filed past-year tax returns, this oversight will eventually catch up with you. The penalties levied by the IRS may be more lenient if you have your attorney write detailed explanations as to why you failed to file your taxes in previous years.
  • If you need to appeal your tax obligations, an attorney can advise you about your right to appeal and what to expect during the appeals process.
  • You need research and information about how the lengthy and complex tax law applies to your specific situation.
  • You need help structuring investments and income to minimize your tax burden.
  • If you are splitting from a partner who you live with but are not married to, a tax attorney may be needed to determine the tax consequences of dividing property. While this type of property division is tax-free for married couples according to Forbes, the same does not apply to couples who cohabitate but are not legally married.
  • You are in the process of divorce and have been accused of tax fraud by your spouse.
  • If you move to another state, the state you used to live in may still require you to pay taxes. A tax attorney can negotiate on your behalf in this situation.
  • You want to understand the far-reaching financial implications of specific tax situations, especially if you own a business or have complicated assets.

If You Are Convicted of a Tax Crime

If you are being investigated by the IRS for a criminal matter, such as fraudulently claiming credits or deductions, it is essential to seek the guidance of a tax attorney who is experienced in litigation and can defend your interests in court.

What Does a Tax Attorney Do?

Any information you share with a tax attorney is confidential and does not legally need to be divulged during court proceedings; this is not necessarily the case for an accountant. This means that you can share every detail of your case and brainstorm potential defenses with your attorney without the fear that this information will be used against you.

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Penalties for tax fraud and evasion can include substantial fines and jail time. You’ll also be required to pay all back taxes with interest and fees.

Honest mistakes are not considered fraud by the IRS. Actions that do constitute fraud and require specialized legal representation include:

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  • Intentionally claiming less income than you actually make on your tax return
  • Not filing tax returns in years when you earned income
  • Hiding assets or income from the IRS
  • Failing to make tax payments as agreed
  • Engaging in other types of illegal activities

Negotiating With the IRS

Although the IRS does offer payment plans to taxpayers who are unable to resolve their debt, it can be a challenge to qualify for and negotiate a settlement under these types of programs.

If you have tax debt you are unable to pay, a tax attorney can help you negotiate an offer in compromise. This means that the IRS agrees to settle your tax debt for less than you owe. This program has strict eligibility requirements and it can take up to two years to process your application.

In addition, these arrangements are accepted by the IRS in only a small percentage of cases. For example, the IRS received 67,000 requests for an offer in compromise arrangement in 2015 and accepted just 27,000 of these requests. A tax attorney can help frame your offer in compromise in a way that makes it more likely to be approved and often streamline the process.

Another program for delinquent taxpayers is the IRS Fresh Start Program, which launched in 2011 to provide individuals a reasonable way to resolve their tax debt. Under this program, a lien will not be placed on your personal property until your tax debt exceeds $10,000. With a lien, the IRS retains ownership of assets until you pay your tax debt. Fresh Start also makes it easier to qualify for an installment agreement if your tax debt amount is below $50,000.

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This program also makes allowances in negotiating the amount of debt you can afford to pay by creating realistic future income calculations, increasing allowable living expenses, taking student loan and state and municipal tax payments under consideration, and excluding certain items such as bank accounts and automobile equity from tax levies.

If you think you may qualify for Fresh Start or an offer in compromise, talk with a tax attorney about your options before approaching the IRS with an offer to negotiate.

In the Event of an Audit

The IRS may require an audit if they think you may have paid the wrong amount of taxes. Because an audit is a legally binding process, you should have a tax attorney who can advocate on your behalf. If you are subject to an additional tax burden after the audit, the attorney can argue for penalty abatement and help you arrange installment payments. Although you are technically allowed to represent yourself in a tax audit, it’s usually not prudent to do so unless you understand the applicable laws, can provide the required documentation, and owe less than $10,000.

When you receive notification of an audit, a tax attorney can advise you on next steps. A correspondence audit is done by mail and is used for less complex audit cases. An office audit requires you to bring associated documents to a local IRS office. The field audit is done by an IRS representative at your place of business.

When You Don’t Need a Tax Attorney

In some cases, it makes sense to represent yourself in dealings with the IRS or have your CPA do so. Tax attorneys do not typically handle minor mistakes or adjustments that need to be made to a tax return, file extensions for your tax return, or complete and submit tax returns. These are routine matters best done by the individual or his or her accountant.

Finding the Right Tax Attorney

All attorneys must obtain a juris doctorate (J.D.) degree and be admitted to practice by the state bar association. However, tax attorneys also have additional specialized training in their area of expertise. This often includes the master of laws (LL.M.) degree in taxation in addition to the J.D. Some tax lawyers also have a background in accounting. A tax attorney who is also a CPA may be the best person to assist if your tax issue includes complicated accounting principles.

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Not just any tax attorney will do, especially if you are accused of a tax crime or owe substantial back taxes. You must make sure that the attorney in question has the training, experience, and credentials needed to advocate for your specific situation. For example, some tax attorneys specialize in audits, others in estate issues.

Before hiring an attorney, check with local and state bar associations to make sure he or she is licensed and in good standing. You can also read online reviews about his or her practice to help inform your decision. Ask the attorney how he or she keeps up with changes in the tax code. In this area of law, being aware of constant updates is a critical part of practice.

In most cases, attorneys offer a free consultation before agreeing to take your case. This is a good opportunity to learn more about their areas of experience. Some questions you should ask during this initial meeting include how much the attorney charges and what type of fee schedule you will be subject to; how many cases of this type he or she has handled and the outcomes of those cases; and whether he or she is able to provide references from other clients.

Most tax attorneys charge an hourly fee along with a retainer, which is an upfront fee that allows you to retain their services. In rare cases, a tax attorney may charge a flat project-based fee. Although their expertise may come at a premium cost, in many cases, hiring a tax attorney can greatly reduce your past-due tax burden and decrease or eliminate penalties and fees.

If the attorney you consult with isn’t the right fit, he or she may be able to provide a referral to a colleague who has more experience in your required area. You can also seek lists of registered attorneys through professional organizations such as the National Association of Tax Professionals and Tax Law Association. Ideally, a tax attorney should have sound knowledge of the tax code and be able to present a range of potential solutions for your tax issue. They understand the most effective methods for dealing with the IRS and can often minimize your penalties and fees.

If you’re struggling to pay your tax debt, Solvable can help. We specialize in finding the best debt relief companies for your specific situation. Our debt relief process includes a free consultation and expert advice about how we can advocate on your behalf to find a solution to your IRS issues.

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Andrea Miller
Expert Contributor
Last Updated:

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