There is a reason filing taxes is one of the biggest pet peeves in the United States. Unfortunately, problems with the IRS often require adequate legal representation to swing the negotiations in your favor.
We often get asked, “What is an example of a situation where I would want to hire a tax attorney?”
There are several circumstances where it is recommended to hire an attorney. We’ve put together this simple guide to help you determine when it’s time to hire a tax attorney.
1. IRS Audit
Even though most taxpayers assume tax audits happen all the time, that actually isn’t the case. The IRS is auditing fewer tax returns, largely because the agency has trouble keeping up with the workload.
The IRS utilizes a computer system called the Discriminant Information Function (DIF), which flags returns with major discrepancies or potential tax fraud. If you get audited, that does not make you guilty. Sometimes the DIF system makes an error, or the IRS simply needs more information to verify income or claims. However, if the audit involves a lot of money, such as with your small business, you should consider legal representation.
Tax attorneys can make sure you are treated fairly by the IRS and also deal directly with the agency, allowing you to continue to work and focus on your own life. They are seasoned pros when it comes to tax law and audits.
2. Debt Settlements
Though you can make an Offer in Compromise on your own, the truth is you have better odds of getting a favorable settlement if you are represented by a tax attorney.
A tax attorney can help you negotiate a settlement with the IRS if the agency claims you owe more in back taxes. The settlement could potentially save you hundreds or thousands on a tax debt.
Nothing is guaranteed with a tax attorney, but they are experts when it comes to putting together OICs and other proposals involving penalty abatements or installment agreements.
3. Power of Attorney
There are several reasons someone might assign another person the power of attorney, such as if a person is disabled or has other issues that may inhibit their ability to correctly defend themselves. Sometimes, it is nothing more than that person not having the time to defend themselves.
The IRS may demand and require a lot from you. However, if you sign over power of attorney, that individual is now able to represent on your behalf and prevent the IRS from harassing you on a daily basis.
Tax attorneys are masters at dealing with the IRS. An attorney will prevent you from being bossed around or intimidated by the agency.
4. Protecting Business Interests
Many businesses rely on a tax attorney from day one. Perhaps you are considering a merger? A tax attorney can help you plan a merger for tax purposes, as well as explain the best way to seek venture capital funding.
Tax lawyers can also assist with other complicated tasks, like building the tax structure of an LLC compared to a corporation or creating an estate plan for an inheritance. Some are also skilled in handling nonprofits and all the nitpicky details of abiding by Tax Code.
5. Criminal Charges
Facing criminal charges is obviously a serious matter. Tax Court is no different from the regular courts. You absolutely must invest in legal protection.
If the IRS approaches you with criminal charges, it is time to hire a lawyer. The IRS usually only pursues charges if something severe is alleged, such as tax evasion or fraud. You could be facing prison time or serious fines, so make sure you get fair and adequate legal representation.
Affordable and Honest Tax Attorneys
Most people shy away from even considering a tax attorney because they automatically assume it will cost too much. However, hiring a tax attorney could be the thing that keeps you out of jail.
Contact Levy & Associates today for fair and affordable tax representation. We have over 20 years of experience, and your initial consultation is free with no strings attached. Levy & Associates is available at 800-TAX-LEVY or www.www.levytaxhelp.com.