When Should I Hire a Tax Lawyer?

When Should I Hire a Tax Lawyer?

While filing regular returns does not require you to hire a tax lawyer, there are more complex tax issues that may require some extra help. 

Hiring a tax attorney when you have to handle tax issues outside your scope of knowledge gives you peace of mind and goes a long way in keeping your business compliant with IRS tax regulations.

What Does a Tax Lawyer Do?


A tax attorney helps you organize your finances to ensure that your business is compliant with tax regulations and optimize tax situations. Experienced tax lawyers can also handle any disputes with tax authorities, including the IRS.

There are also some tax lawyers who specialize in business taxes, international taxes, or estate taxes, among others. If you are looking for a tax lawyer, you can find one at an accounting firm or at a law firm.

When you need to hire a tax lawyer, we recommend contacting a law firm. In addition to offering advice on tax compliance rules, these tax lawyers can also help you draft legal documents such as contracts to help you achieve favorable tax outcomes. They can also represent you in tax court and any other areas where there are tax disputes.

Do You Need to Hire a Tax Lawyer?


If you have legal tax issues that are more complex than you can handle in-house, it may be time to hire a tax lawyer. Here are some factors that determine when you need to hire a tax lawyer.

IRS Audits


Routine IRS audits may not require a tax lawyer. However, if you have tax disputes, you may need legal representation. An experienced tax lawyer can represent you in court and negotiate settlements.

If the IRS is pursuing criminal charges for problems such as willful tax evasion, not filing tax returns, claiming fraudulent credits or deductions, concealing taxable income, or other instances of tax fraud, hiring a tax lawyer can help you reduce the IRS penalties.

You can also consult a lawyer if you are unsure about any formal IRS notices. The IRS sends many types of notices including:
  1. CP notices to inform you when you owe money
  2. CP501 for an unpaid balance
  3. CP2000 when your returns do not match the reported income on the W-2 and 1099 forms

Consider giving your tax lawyer Power of Attorney so they can communicate directly with the IRS.

Estate Planning


When leaving money to an heir in your will, tax implications can take a large chunk of the inheritance. 

Working with a tax lawyer who specializes in estate planning can help you minimize these tax implications. A tax lawyer can also help you handle the paperwork and set up trusts.

Hiring a tax lawyer is also important when planning to buy property such as rental property.

Starting a Business


A tax lawyer can educate you on the various tax laws depending on the type of business and where you set it up. When starting a business, a tax lawyer can offer guidance on withholding taxes, 941 returns for employees, and federal tax deposits.

In addition, a tax lawyer can also help in devising tax-smart strategies when buying, disposing, and expanding your business.

Tax Disputes


An IRS audit does not mean that you have done something wrong. However, you reserve the right to representation by a tax lawyer. You can also hire a tax lawyer if you disagree with the audit results.

Whether the dispute involves an appeal, investigation, or collection motion, consider hiring an experienced tax lawyer who has in-depth knowledge of state and federal tax laws.

Tax Relief


Do you owe the IRS money? A tax lawyer can help you negotiate repayment. If you are afraid that your tax debt is too high, hiring a tax lawyer can help you negotiate lower payments spread out over time with the tax authorities.

In extreme situations where your property or accounts are seized, consider hiring a tax lawyer to help you build your case.

What to Look for In a Tax Lawyer


When hiring a tax lawyer, consider the following factors.
  1. Law License: A tax lawyer must have a law license. Our lawyers are licensed and can be found on the American Bar Association Website. Before hiring a lawyer, visit the site to make sure that they are licensed.
  2. Preparer Tax Identification Number: A PTIN is issued by the IRS to anyone who prepares tax returns for compensation. Tax lawyers and CPAs must have a PTIN to practice.
  3. Law Degree: A tax lawyer must have a law degree issued by an accredited institution. Consider hiring a tax lawyer who has specialized credentials depending on why you are hiring a tax lawyer. For instance, if hiring a tax lawyer for estate planning, look for an LLM.
  4. Client Testimonials: When hiring a tax lawyer, consider their track record to gauge the quality of their services. We recommend taking the time to review client testimonials.

Should You Hire a Tax Lawyer or a CPA?


While both professionals work on tax-related matters, a tax lawyer has a wider range of knowledge on legal issues pertaining to taxation.

A CPA is qualified to prepare taxes, manage bookkeeping, audits, and other financial matters. However, a tax attorney is better suited to handling complex taxation issues.

Hiring a tax lawyer also offers you substantial protection and advantages. For instance, some CPA-client communications are not protected under state or federal laws. Get in touch with us to learn more about attorney-client privilege.

Summary


Hiring a tax lawyer ensures you have access to legal representation when you have complex tax problems such as back taxes, criminal charges, and other tax-related litigation. A tax lawyer is also an investment that can help you save money with strategic tax planning.

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