When to hire a tax attorney
It can be tough to successfully navigate the complex tax laws and rules set by the Internal Revenue Service (IRS), even for the most financially savvy taxpayers. If you're facing a particularly complex financial situation or dispute with the IRS, though, that intricate web of regulations, deadlines and requirements can leave you wondering if it's possible to handle your tax issues independently or if you need to employ professional assistance instead.
While many taxpayers can manage their taxes with the help of accountants or tax preparers, there are certain scenarios in which it's best to call a tax attorney. That's because, unlike accountants, who focus primarily on tax preparation and compliance, tax attorneys bring legal expertise, representation and advocacy to the table. Those skills can be crucial if you're facing an issue with potential legal implications or where significant assets are at stake.
Hiring a tax attorney can come with hefty legal fees, though, so it's important to understand when hiring one is the right move, and when it may be better (and more affordable) to stick with another type of tax professional instead. So when exactly does it make sense to seek the assistance of a tax attorney? That's what we'll discuss below.
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When to hire a tax attorney
There are several situations where hiring a tax attorney may not just be beneficial but necessary. Here are some of the most critical instances:
When you're facing an IRS audit or investigation
If you are being audited by the IRS, a tax attorney can help you understand your rights and obligations. While not all audits require legal representation, having an attorney is particularly important if the audit uncovers potential fraud, unreported income or other serious issues.
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When you're dealing with tax liens or levies
If the IRS has placed a lien on your property or is threatening a levy to seize your assets, a tax attorney can negotiate on your behalf to resolve the issue. They can help set up installment agreements, Offer in Compromise settlements or explore other legal remedies to prevent asset loss.
When you owe a significant amount in back taxes
When you owe a large sum to the IRS, the agency can take aggressive collection actions to try and recover what's owed — which, in turn, can have a big impact on your finances. In this situation, a tax attorney can negotiate repayment plans, reduce penalties or explore settlement options that could lower your overall tax burden.
When you're facing criminal tax charges
If you are under investigation for an issue like tax fraud, tax evasion or other criminal tax offenses, hiring a tax attorney is incredibly important. They can provide your legal defense, negotiate with prosecutors and help you navigate the complex legal proceedings that you may face after the investigation is complete.
If you're dealing with international tax matters
If you have foreign income, offshore accounts or are dealing with expatriate tax issues, a tax attorney can help you navigate the complex international tax regulations set in place by the IRS while avoiding legal pitfalls.
How to find the right tax attorney
Once you've determined that you need a tax attorney, the next step is to find the right one for your situation. Here are some tips to help you choose the best tax attorney:
- Look for specialization and experience – Not all tax attorneys handle the same issues. Some focus on criminal tax defense, while others specialize in estate planning or business taxation. Make sure to find an attorney with experience relevant to your needs.
- Check credentials and licensing – Ensure that the attorney is licensed to practice in your state and has a strong educational background in tax law. Many tax attorneys have additional certifications, such as being a certified public accountant (CPA), which can be beneficial.
- Consider reputation and reviews – Look for online reviews, client testimonials and peer ratings to gauge the attorney's reputation. A well-reviewed attorney with a history of successful cases is a good indicator of reliability and expertise.
- Schedule a consultation – Many tax attorneys offer free or low-cost consultations. This is an opportunity to discuss your case, ask questions and assess whether the attorney is a good fit for your needs.
- Compare fees and billing structure – Tax attorneys charge different rates based on experience, location and the complexity of your case. Some charge hourly, while others may offer flat fees for certain services. Make sure you understand the cost before hiring an attorney.
The bottom line
For routine tax preparation and planning, accountants and tax preparers can typically provide you with sufficient assistance at a lower cost. However, when your legal rights are at stake, substantial amounts of money are involved or you're facing aggressive collection actions, the specialized legal knowledge of a tax attorney becomes invaluable. They can negotiate with tax authorities from a position of legal expertise, represent you in court proceedings if necessary and protect your interests throughout the resolution process.
