Hiring a Tax Attorney

Preparing and filing federal income taxes can be stressful if you have a complex family or financial situation. Different rules may apply to you, depending on whether you have a spouse, children, or dependents.

Additionally, reporting and filing requirements are often based on such things as your job situation, whether you own your own business, have recently retired, or have assets in a trust. These issues can present difficult questions to taxpayers, and mistakes can lead to larger tax bills and penalties.

Consulting with a tax attorney can provide you with answers to these federal tax questions and ensure that you don't run afoul of the Internal Revenue Service. Most taxpayers know to consult with a tax lawyer if they are facing a tax lien or wage garnishment over a tax debt.

However, fewer understand that a tax attorney can keep them from getting into trouble. Even if you don't think your tax situation is complicated, a tax attorney can help with the tax planning necessary to prepare for retirement or other life events.

What a Tax Attorney Does

A tax attorney can perform several services for a client, including:

Preparing Returns and Other Documents

In addition to practicing law, tax lawyers are qualified to prepare and submit tax returns on your behalf. Many attorneys are also certified public accountants (CPAs). That means if you go to a tax attorney with a legal question, you don't need to turn around and find another tax professional to file a return based on the advice you receive. Additionally, a tax lawyer can draft other documents that must be submitted to the IRS on your behalf, such as documents to support claims on your tax return.

Legal Research

A taxpayer is rarely facing a truly unique tax problem. Often, the IRS and the courts have already answered the question or ruled on a similar situation. A tax lawyer can review laws, regulations, and court decisions to find a solution to your tax question that should withstand IRS scrutiny. If you are facing a unique tax situation for which there is no prior guidance, an attorney interprets tax law to find a solution.

Business Returns

Millions of Americans operate small businesses that often generate their own tax issues. Additionally, U.S. tax law treats income from businesses that operate as sole proprietorships, partnerships, and S corporations as personal income to the owners. As a result, any business tax problems they are experiencing could impact their personal returns. Most tax lawyers work with small businesses and their owners to resolve any legal issues.

Audit Defense

The IRS conducts several types of tax audits. Some pose a more serious threat to taxpayers than others. In many cases, the audit simply asks for additional paperwork to verify that your returns were correct. But sometimes, the IRS is investigating more serious issues. A tax attorney can help you prepare for the tax audit by helping collect the correct information and ensuring it is accurate. You can also authorize them to speak on your behalf during meetings with auditors.

Client Representation

When a taxpayer has a dispute with the IRS regarding their tax situation, they need someone to advocate on their behalf. While taxpayers always have the option of representing themselves before the IRS and the U.S. Tax Court, an experienced tax lawyer is almost always the better choice.

An attorney understands the rules and procedures for appealing an IRS decision through the agency's appeals process or in court. Additionally, a tax lawyer can represent their client in negotiations with the IRS to ensure they get the best deal possible.

Tax Planning

Often, the best way to save money on your income is to make sure it is never subject to tax. A tax lawyer's knowledge of the tax code and IRS rules and regulations can help you structure your affairs to minimize your tax bill. This can be anything from helping set up tax-deferred retirement accounts to structuring your business to minimize tax payments. An attorney can also help with estate planning and setting up trusts.

Criminal Defense

If the IRS believes you have committed tax evasion or tax fraud, a tax attorney has passed the state bar exam and will represent you in court. The IRS usually imposes administrative penalties outside of the courts. But tax evasion and tax fraud are serious crimes that can lead to substantial fines and even jail time.

How Much Does a Tax Lawyer Charge?

Unfortunately, it's impossible to give an average cost of what a tax attorney will charge for any given service. Their fees can vary by state or region, the services they provide, and their experience level. Most attorneys specializing in tax matters will charge an hourly rate of anywhere from $100 to $500 an hour for legal advice, but some will charge a lower flat fee for routine matters. Attorneys with fewer years of experience will sometimes charge a lower rate while building up their client base.

One way tax attorneys operate differently than most attorneys with other specializations is that they usually charge for their initial consultation. However, they are usually required to provide you with a breakdown of any fees they charge in advance, so there shouldn't be any surprise bills. Many lawyers are also willing to work out a payment plan with their clients.

If you have only a few questions about how items should be reported to the IRS on your tax return, consulting with a tax lawyer in advance may seem like an expensive proposition. But it may save you from paying additional taxes, penalties, and interest. Plus, if your actions get you into trouble with the IRS, you may still need to hire an attorney to represent you.

Tax Questions? A Tax Lawyer Can Help

If you have questions about how tax rules and regulations apply to your personal or family situation, a local tax attorney can help. An experienced tax attorney understands tax preparation, the U.S. Tax Code, and what the IRS expects of taxpayers with specific income and expenses. Finally, a tax attorney can protect your rights if the IRS begins questioning your tax returns.