You don’t necessarily need a lawyer for every tax situation, but having an attorney on your side can be an enormous help if you run into specific issues.
This article will review some of the most common tax issues people face (both as businesses and individuals), and how a lawyer can help resolve them.
But First, what is a Tax Lawyer?
A tax attorney is a licensed attorney who is trained in the area of law. Often, this type of lawyer will also have a background and education in accounting, though this is not always the case. Because of this caveat, it’s a good idea to seek out tax lawyers who are also CPAs (certified public accountants). A lawyer with this training is more likely to be intimately familiar with the ins and outs of current tax law.
Issues that Tax Lawyers Can Assist You With
Tax lawyers can help with both technical issues and legal issues. To illustrate, let’s go over some common scenarios that would warrant the assistance of a tax attorney.
Issue 1: High-Value Estate Issues
No one wants to think about the idea of one day leaving this world, but it is important to consider what happens to one’s heirs. After all, you want your family to benefit from the fruits of your labor, not Uncle Sam.
As of 2021, estates that exceed $11.7 million in total value will require a tax return, and your heirs could be on the hook for a 40% tax rate. There are ways to stay below this threshold without sacrificing family wealth by working with a tax lawyer.
Issue 2: Business Startup Issues
Businesses and taxes go hand-in-hand, and the amount of taxes you’ll pay can vary greatly depending on your business structure. Choosing the proper setup from day one can save you a lot of headaches (and money) down the road.
A tax lawyer can help you decide whether your best bet is to form a sole proprietorship, partnership, LLC, S-Corp, or an alternate entity. There are different tax implications for each.
Issue 3: Criminal Investigation
If you made an error on your tax return or your subject to an IRS audit, it could feel like the end of the world. Even worse is if you’re facing criminal charges for fraud and tax evasion. In this situation, you want someone who knows both taxes and the law. A tax lawyer is uniquely situated to help with this type of issue.
As you can imagine, the stakes are high, and going up against the IRS is a lot like David facing Goliath. Having an experienced attorney on your side will show the IRS that you are taking the situation seriously, and you’ll have an advocate to negotiate on your behalf.
Issue 4: Tax Disputes
If you didn’t file taxes or the IRS is disputing the amount you owe, you might need an attorney to step in and help iron out the issue. Tax attorneys can advocate for several solutions that can give you more time to settle a bill and even reduce the amount you owe.
These solutions include:
Offer in Compromise (OIC):This program allows you to negotiate your tax bill. An experienced attorney will argue for OIC eligibility and work to reduce your burden by as much as possible.
Removing Tax Liens and Levies: After a certain amount of time, the IRS can begin garnishing wages, seizing assets, and attaching liens to businesses and properties. Having an attorney is imperative to get these liens removed.
Installment Agreements: Ultimately, the IRS wants to receive the money they think they’re owed. Often, they’re willing to negotiate. Even if they don’t reduce the amount you owe, they may be open to structuring a manageable installment plan that allows you to become debt-free. An attorney can help negotiate the most favorable terms.
Why Work with a Lawyer for Tax Issues
Tax lawyers have a background that allows them to represent you in court while having in-depth knowledge of tax laws (and your rights). That’s a compelling reason, but it’s not the only one. Most notably, when you hire a tax lawyer, you have an attorney-client privilege. This means that your attorney cannot testify against you, even if you’re “guilty” or made a conscious error on your taxes.
Though there’s no guarantee that you’ll be rewarded with a favorable outcome, you can still be assured that you’ll have someone on your side representing you who is loyal and will do what they can to protect your finances and your freedom.
Have a Tax Issue? Get in Touch.
If you’ve encountered any of the tax issues described in this article, it’s important to get in touch with a tax lawyer as soon as possible. At Levy & Associates Tax Consultants, we have a comprehensive team of tax specialists, ranging from attorneys to former IRS officers. We offer a free tax analysis, so we encourage you to contact us today for help.