When To Hire a Tax Attorney

Updated January 30, 2024
5 min read
When To Hire a Tax Attorney

The need for professional guidance becomes evident, with taxes, audits, and penalties appearing to be excessive challenges. So, who can aid you in navigating these treacherous waters? The answer — tax attorneys.

Tax complexities vary widely; the spectrum extends from simple to mind-numbingly intricate. Regardless of complexity, making an error when dealing with the government can lead to harsh consequences. Therefore, knowing when to hire a tax attorney and how much a tax lawyer costs can significantly support your cause.

Who Is a Tax Attorney?

Much like cardiologists specialize in ailments of the heart, tax attorneys are lawyers specializing in tax laws and regulations. They are qualified professionals who have passed their state bar and a national multistate exam, allowing them to practice law.

Tax attorneys can serve in the government, private practice, or nonprofits. They routinely deal with various tax issues, including but not limited to State, local, personal, corporate, and international taxes. Additionally, they handle tax-dispute litigation, estate planning, and tax strategies and establish and manage nonprofit, tax-exempt organizations.

The Role of Tax Attorney

Everyone aspires to minimize the tax burden on their income and investments while complying with all tax laws and regulations. Ultimately, the ideal scenario involves overpaying taxes, which leads to tax refunds.

When you run into trouble with the state or federal tax authorities, an experienced tax attorney becomes indispensable. They can assess your personal and corporate financial situation to help you optimize your tax filing. They also track tax legislation, structure wills and estates, and counsel clients dealing with tax disputes, among other services. Essentially, they can deal directly with the government as their client’s legal representative.

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When Should I Hire a Tax Attorney?

Understanding when to engage the services of a tax attorney is crucial for anyone, especially those involved in businesses with diverse tax-related aspects. Knowing the reasons to hire a tax attorney can help individuals and companies navigate complex tax regulations, ensure compliance, and save significant amounts of money by avoiding legal pitfalls.

  • Starting a business: A tax attorney can provide invaluable aid when setting up your business. Tax implications exist at almost every step, from business structure to daily operations.

  • Tax disputes: Despite your best efforts, tax errors can still occur, or questions might arise. In such cases, having an adept tax attorney can make an enormous difference in dealing with audits or the IRS.

  • Trust and estate planning: If you're planning to buy or sell property or transfer property and assets to family members, enlisting the services of a tax attorney is a wise move. They can help navigate any potential tax implications and work towards reducing the tax burden for your loved ones.

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  • Tax debt: If you find yourself in tax debt, an accomplished tax attorney can help negotiate a lower tax bill or establish a convenient payment plan, helping avoid wage garnishments or litigation.

  • IRS investigation: If the IRS suspects tax fraud or other tax-related malpractices, an experienced tax attorney can collaborate on your behalf, minimizing penalties.

Recognizing these potential situations, having a reliable tax attorney on your speed dial ensures you're prepared for any tax-related predicaments. It is an essential step towards safeguarding your financial health. Experts who guide, advocate, and fight for your rights are indispensable allies in navigating the complex maze of tax laws.

What To Look for When Hiring a Tax Attorney

Choosing a tax attorney is a significant decision. The professional you hire will ensure you navigate tax laws effectively. Therefore, it's essential to consider several factors before making your choice:

  1. Client testimonials: Reviews and testimonials from past clients can provide insight into a tax attorney's capabilities and performance.

  2. Licensure: Confirm that the tax lawyer is licensed to practice in your state.

  3. Tax specialization: Consider the attorney's areas of expertise in taxes. Their specialties could be a determining factor if they align with your needs.

  4. Tax preparation skills: The ability to accurately prepare and submit tax returns is a critical skill of a proficient tax attorney.

By carefully considering these criteria, you can select a tax attorney who understands your specific needs and has the credentials and experience to deliver optimal results.

Pros and Cons of Working with a Tax Attorney

Opting to hire a tax attorney is a significant decision that should consider various aspects. These include:

  1. Unique situational needs: The intricacies of your specific tax situation can necessitate the expert guidance that a tax attorney can provide.

  2. Legal expertise: Tax attorneys bring a wealth of legal understanding that extends beyond tax preparation and may prove crucial in dealing with audits, disputes, or IRS investigations.

  3. Negotiation skills: If you're facing tax debt or IRS issues, tax attorneys can negotiate on your behalf, potentially reducing your liabilities or arranging favorable payment plans.

  4. Costs: Engaging the services of a tax attorney is usually a significant financial commitment and should be factored into your decision. The average cost of hiring a tax attorney typically ranges between $300 and $400 an hour.

Weighing these considerations can help you make a more informed decision about whether or not to hire a tax attorney.

When Do You Need a Tax Attorney as Opposed To a CPA?

Determining whether to hire a Tax Attorney or a Certified Public Accountant (CPA) involves understanding their unique skill sets:

  • Tax attorneys: They come with a broad legal background and specialization in tax matters. This allows them to offer tax advice, plan tax strategies, handle legal tax disputes, and represent clients in dealings with the IRS.

  • CPA: CPAs are proficient in accounting and financial record keeping. Their expertise primarily lies in preparing and filing tax returns, financial planning, and auditing financial statements.

Considering these differences based on your specific needs or circumstances is essential to make an informed decision.

How Much Does a Tax Attorney Cost

The cost of hiring a tax attorney can vary greatly, depending on your specific situation, the complexity of your case, and the attorney's level of expertise. On average, you should pay anywhere between $200 to $400 per hour for a skilled tax attorney.

However, some law firms may offer fixed-rate services for straightforward cases, while others might charge a contingency fee, particularly in cases involving a dispute with the IRS. It's essential to discuss payment terms with potential attorneys before hiring to ensure their services align with your financial capability.

Conclusion

Tax matters might be more engaging, but understanding when to hire a tax attorney is crucial. For that, consulting a tax attorney is highly recommended. They can ensure you comply with all the rules while getting the most tax breaks. If a confrontation does occur with the IRS, then an experienced tax attorney can be your best ally.

Article by
Yevheniia Savchenko
Lawrina

Yevheniia Savchenko is a Product Content Manager at Lawrina. Yevheniia creates user interface copies for Lawrina products, writes release notes, and helps customers get the best user experience from all Lawrina products. Also, Yevheniia is in charge of creating helpful content on legal template pages (Lawrina Templates) and up-to-date information on US law (Lawrina Guides). In her spare time, Yevheniia takes up swimming, travels, and goes for a walk in her home city.

If you have any questions or suggestions regarding the product or UX content for Lawrina, feel free to contact Yevheniia directly at y.savchenko@lawrina.org or connect with her on LinkedIn.