What is a Tax Lawyer?
A tax lawyer specializes in tax laws and helping clients with planning for, paying, and filing taxes as well as resulting legal issues. In general, they offer two different kinds of services, and some specialize in both or just one or the other:
- Tax planning. If you can do this part right, you can avoid the second one. Most individuals do not hire tax attorneys for planning purposes, but businesses do. A tax lawyer can help a business owner strategize to save money on taxes and to pay and file on time without penalties. They help their clients stay in compliance with all aspects of the tax code.
- Tax problems. A tax lawyer can also help clients, both individuals and businesses, deal with legal issues that arise from their taxes. They may guide their clients through audits, for instance, or represent them in a hearing or Tax Court.
Do I Need a Tax Lawyer?
Most individuals with simple taxes do not need a tax attorney. They may hire a tax accountant or file their taxes without assistance. There are certain situations in which you should consider hiring a tax lawyer:
- You’re thinking of starting a business and need advice on how it will impact your taxes.
- You want to buy or sell a business.
- You have an estate that is taxable, which means an estate above a certain value—$11.7 million for 2021.
- You’re working on estate planning and want to leave inheritances to your heirs.
- The IRS is auditing you.
- The IRS has accused you of doing something wrong or charged you a penalty you believe is in error.
- You want to challenge the IRS, for instance, for denying a deduction or miscalculating your gross income.
- You owe back taxes.
What a Tax Lawyer Can Do for You
None of these issues require that you work with a tax attorney. You can handle any tax challenge, penalty, or audit without representation if you choose. There are many good reasons to use the services of a tax law expert:
- Experience and expertise
Few people are experts in the tax code. You don’t have time to become one, so rely on a tax lawyer. They can give you the benefit of their knowledge of the laws and experience working with other clients.
- Avoid Tax Court
You can challenge the IRS in U.S. Tax Court, but a lawyer can probably get your petition in and settled without actually going to court.
- Save money
Whether you have a business or complicated personal taxes, a lawyer who understands the complicated tax code knows how to save you money.
- Get through an audit
An audit can be a scary process. You may not understand how it will impact your finances or the outcome, but a tax lawyer can put your mind at ease. They’ll take charge and make sure you get the best possible outcome.
- Manage back taxes
If you owe the IRS back taxes, a lawyer will advocate on your behalf. They can work with the IRS to set up an installment plan or even a compromise to reduce your total burden.
What to Look for in a Tax Lawyer
A tax lawyer isn’t difficult to find. Many firms specialize in tax services. Be sure to get a referral from someone you trust, if possible, and if not, to interview several lawyers before deciding.
It’s important that you make sure the lawyer you hire is admitted to the bar of the U.S. Tax Court. They will not be able to represent you in Tax Court if not. This should be the first question you ask. Other questions to ask before choosing a tax lawyer include:
- Are you admitted to the bar in the state where I pay taxes?
- What kinds of tax work do you mostly handle?
- Do you work with businesses or individuals, or both?
- Have you worked on a case like mine?
- What do you think I should do next?
- How long will it take to resolve my issue?
- Will I have to go to Tax Court?
- What are your fees?
How to Work with a Tax Lawyer
The right tax lawyer will advise, educate, and guide you, but they cannot make your decisions for you. They also cannot promise you a certain outcome, so manage your expectations and be a good client and work with them so they can help you:
- Provide all the necessary documents related to your taxes, including filings, receipts, incomes, and business paperwork.
- Keep your paperwork neat and organized.
- Answer all of your lawyer’s questions and be honest, even if you think you’ve done something wrong.
- Be easy to reach and answer calls and emails in a timely fashion.
- Be on time for appointments, hearings, and meetings with the IRS.
- Ask questions to stay informed and make decisions so your lawyer can take action to settle the situation for you.
Working with a tax lawyer is an important way to avoid tax mistakes or to get out of legal trouble with the IRS. Choose the right lawyer to educate you about your options and to provide informed, expert advice.