What Is a Tax Attorney and When Should You Hire One?

If you’ve ever encountered a problem with the IRS, you know that it’s not easy dealing with them. A letter from IRS is usually bad news, and you need to think carefully about how you’re going to react to it. If you are an US citizen, one thing you should do if you’re in trouble is to consult a qualified tax attorney to get appropriate legal advice on Expats taxes.

Getting legal advice reduces the stress of dealing with tax issues and decreases your chances of making a mistake. But before you get to that, you need first to understand what is a tax attorney. Knowing who’s a tax attorney and what they do will help you choose the right person to handle your tax woes.

What Is a Tax Attorney?

A tax attorney is a legal representative that helps people caught up in issues involving tax. They help business people and individuals deal with complex legal matters involving a tax situation.

Tax law attorneys have gone through advance training on matters involving the IRS tax code and are qualified to offer professional help with taxes. They can use their skills and knowledge to ensure you don’t end up making mistakes that can land you in trouble with the IRS. They can assist in a complicated tax situation and ensure you get the best results.

When Should You Hire a Tax Attorney?

You don’t need to have a full-time tax attorney by your side, but whenever you face a complex situation, you’ll need one. You must understand that tax laws are very complex, and a simple mistake can even land you in jail if you’re not careful.

So, what does a tax attorney do? Here are different situations which can force you to hire a tax attorney.

You’re Facing an IRS Audit

IRS picks businesses to audit randomly; hence, they can land on you any time. But at times, they can choose your business if they notice some disparities with your taxes. If this happens, you have something to worry about.

When you receive an email from the IRS to provide some information or essential documents for deductions and tax credits, you might need the help of a lawyer. But this is not always the case, especially if they’re issues your accountant can easily deal with.

At times, you might go through an audit process and disagree with the auditors’ decision; you have to appeal through your attorney. A tax attorney will represent you in a tax court or help you negotiate a better settlement with the IRS. With the help of a tax lawyer, you can settle a huge IRS debt for less.

Opening or Selling Your Business

Selling or opening a business is a difficult process that needs serious legal decisions. If you’re careless about this, you might land into problems with the IRS and face some serious tax consequences. You need in-depth knowledge on how to go about tax issues and other legal matters before you proceed.

An attorney will help you structure your new firm and minimize your tax exposure. They’ll highlight all the options at your disposal, consider your tax benefits, and figure out the drawbacks you might face before you proceed.

A tax lawyer will walk you through different entities appropriate for your business. They’ll also help you understand what’s involved in running an international business. They’ll negotiate contracts, track and report income, and other tax matters you might face.

You Have a Taxable Estate

If you have a taxable estate, you need to file tax returns with the IRS. A total taxable estate value per 2020 should exceed $11.58 million at the time of your death. As of 2021, the number rises to $11.7 million.

With this, you won’t have to worry about estate planning. But that also means you’ll expose your heirs to paying estate tax up to 40% of your balance if the estate doesn’t exceed the levels. This means you’ll be giving the government a huge chunk of your property on a silver platter.

Estate planning is a complex process, and you need the help of a tax attorney to help you navigate. A tax lawyer can help you make decisions to minimize the tax burden on your loved ones. They’ll help with strategies that can protect your assets and reduce the amount you give to the IRS.

You’re Facing Tax Evasion and Fraud Cases

Whether you’re running a small business or a huge enterprise, you might face tax fraud or evasion cases at some point. IRS reports firms and individuals for failing to pay taxes, refusing to file tax returns, and not revealing their income sources.

There are many consequences you’ll face due to these charges. The consequences include paying interest on the taxes, facing public humiliation, prosecution, and incarceration. Your information, including name, state, and crime, will appear on the IRS website.

Well, you have the option to negotiate with the IRS, and that will work better if you involve a tax attorney. You need to be very careful with any information you give the IRS officers, as even the slightest mistake can be incriminating. You should not make the mistake of handling such serious cases without the help of a lawyer.

You Owe the IRS a Huge Amount

Owing money to the IRS is one of the reasons you should consider getting the services of a tax lawyer. You need legal representation if you owe more money than you thought or usually pay at the end of the year. This mostly means that you made a mistake somewhere, and the IRS will not understand this easily.

A tax attorney can help you find out where the mistake occurred and figure out a solution. They can also help you negotiate an installment payment to the IRS. If you’re lucky, they may negotiate with the officers to lower the amount in your favor.

You Need a Representative to Talk with the IRS on Your Behalf

The IRS usually sends notices in letters to inform individuals or businesses about the money they owe. They’re known as CP notices, and they can be scary. The CR notices are normally IRS codes.

They can be CP501 which reminds you of the unpaid tax balance for the tax year. They can also be CP2000 that informs you that your income doesn’t match the third-party income statement. Sometimes these notices can be too complex for you to understand or might contain bigger issues that you can’t handle on your own.

If you think the notice is too complex for you, don’t make a mistake of responding. Consult a tax attorney to break down the meaning of the notice. Your attorney will sign an IRS form 2848, which gives them the power to communicate with the IRS on your behalf.

You’ll be putting your attorney in full charge of taking care of all your IRS issues. This way, you won’t have to waste a lot of time worrying about tax issues and can comfortably handle other business matters.

You’re Negotiating the Offer in Compromise

An Offer in Compromise is a form of a legal agreement between the IRS and the taxpayer. The OIC is meant to help relieve you of tax liabilities and allow you to pay less than what you owe the IRS.

For the IRS to enter an OIC with you, you must fulfill some requirements. Convince them that you will pay the full amount within the agreed time.

The IRS’s Offer in Compromise must follow specific criteria that can be very manageable to the taxpayer when done well. If you don’t qualify for the OIC or will still want to negotiate it, you should consult a tax attorney.

The IRS takes two years to review your Offer in Compromise application, and working with a lawyer might increase your chances of qualifying. The lawyer can explain all the details, so you don’t miss anything. They’ll also help you file the IRS form 656, so you don’t miss any important detail that can derail your chances of qualifying.

A Tax Attorney Keeps You Safe from Tax Problems

You never know when you’ll get in trouble with the IRS, but when you do, you should have a tax attorney to cover your back. But what is a tax attorney? As we’ve discussed, a tax attorney is like a bridge between you, your business, and the IRS.

A tax attorney will help you file taxes, pay taxes, and negotiate with the IRS on your behalf. They’ll review your tax situation and help you come up with a working action plan. With an experienced attorney by your side, you’ll avoid making serious tax mistakes that can get you in trouble with the government or land you in jail.

Need more help on tax filing tips and other financial issues? Feel free to browse through our blog.