Circumstances Where You Might Need a Tax Attorney

Jill Bridges
Expert Contributor
Last Updated:
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Interacting with the Internal Revenue Service (IRS) is a fact of life, and no matter how much you prepare, these interactions can be complicated and stressful. While there are some tax issues you can certainly handle on your own, there are many situations when you should strongly consider hiring a tax attorney.

Professional tax attorneys know the correct way to deal with the IRS, especially when it comes to lowering your tax burden or clearing tax debt. Here are some circumstances where you might need a tax attorney to ensure your dealings with the IRS are quick, easy, and effective.

Starting, Buying, or Selling a Business

Hiring a tax attorney is almost always a good decision if you’re thinking about starting a business, are interested in buying a business, or want to sell your current business. For example, during the sale of a business, balancing the needs of both the buyer and the seller can be difficult without guidance from an experienced tax lawyer.

When you’re starting a new business, a tax attorney can help you decide how to structure your business to keep your taxes as low as possible. If you want to choose a formal structure for your business instead of operating as a sole proprietorship, you have several options available to you:

  • Limited liability company (LLC)
  • C corporation
  • S corporation

Your attorney can help you weigh the tax benefits and drawbacks of each of these structures. For example, if you choose to establish an S corporation, your business will not be taxed directly. Profits earned by your company are passed to shareholders and then taxed on their individual returns. Forming an LLC is beneficial because it provides the owners of the business with liability protections, meaning they cannot be sued for business debts.

Circumstances Where You Might Need a Tax Attorney

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If you’re operating a business internationally, hiring a tax attorney is of the utmost importance. Your attorney can help your international business with a variety of important tasks:

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  • Negotiating contracts
  • Correctly reporting income and other assets
  • Additional legal matters

Leaving Money to Heirs

Estate planning is another situation where you may want to consult with a tax attorney. If you have assets that you wish to leave to your family members, you want to make sure they receive as much of those assets as possible, and this is where a tax attorney can help.

If you’re single and leaving someone more than $5.49 million, or are married and are leaving behind an estate worth $10.98 million or more, the people named in your will may pay a 40% tax rate on this money. A tax attorney can help you plan your estate to lower the taxes your heirs will need to pay on their inheritance.

Tax-Related Court Cases

Some problems that arise with the IRS can only be resolved in the courtroom. If you’re dealing with a tax issue that will likely make its way into court, you must be sure to hire a qualified tax attorney.

If you’re planning to file litigation against the IRS, or you want the United States Tax Court to review your case, you need an attorney who has courtroom experience. Tax court proceedings are complex, and without legal representation, you may find yourself facing an unfavorable judgment.

Having an attorney is especially important if the IRS is investigating you for a crime such as tax fraud. The possibility of tax fraud can occur in a number of ways:

  • The appearance of taking deductions to which you were not entitled
  • Suspicion of intentionally underreporting your income
  • Filing a return in someone else’s name

The IRS is often successful in tax fraud cases. If you want to avoid expensive penalties or other consequences, you need a knowledgeable attorney on your side.

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IRS Negotiations and Audits

Working with a tax attorney is the best idea if you are facing an audit or are trying to deal with outstanding tax debt. During an audit, a tax attorney can help guide you through the process so you don’t make any mistakes leading to additional debt. Once the audit has been completed and your debt determined, your attorney may be able to help lower your debt in some of these ways:

  • Making the IRS an offer in compromise
  • Requesting a penalty abatement
  • Negotiating a payment plan
  • Without help from an attorney, it’s possible you’ll need to pay your entire debt.

Finding the Best Tax Attorney

Now that you know some of the reasons you might want to hire a tax attorney, it’s a good idea to learn how to find the best attorney possible. All tax attorneys must meet some basic requirements before they can offer their services. First, they must possess a Juris Doctor (JD) degree. Second, they need to have been admitted to their state bar. If you want the most effective representation possible, however, there are several other qualifications you should be looking for.

To begin with, make sure your attorney has been specifically trained in taxation. Look for an attorney who has earned a Master of Laws degree in taxation. Having this degree means your attorney will have the knowledge necessary to handle a wide range of tax issues.

Next, if you’re dealing with an audit, you may want to look for an attorney who has an accounting background. Although most tax attorneys don’t actually handle any accounting tasks, experience with accounting means they should be able to help you with your audit so you can get the most favorable outcome possible.

If you’re considering hiring a particular tax attorney, there are several questions you should ask before making a commitment:

  • What are their areas of expertise?
  • What are their typical rates?
  • Are they admitted to the state bar?
  • Can they offer a referral if they are unable to help with your specific problem?

If you’re having problems with tax debt, you can get help from Solvable. We offer a library of articles that can help you learn more about your options for clearing your tax debt, as well as reviews of top debt relief companies that can help you deal with the IRS. Get started today so you can clear your tax debt and get your finances back in order.

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Jill Bridges
Expert Contributor
Last Updated: