When you are facing serious tax problems-tax debt, tax audits, wage garnishments, legal issues with the IRS-the last thing you want to deal with is the uncertainty of what the cost for professional help will be. One of the first, and recurring, questions that typically runs through everyone’s mind is simple: How much do tax attorneys charge?
Tax attorneys represent a somewhat niche specialty for lawyers who provide legal services to individuals and businesses that need help to deal with complex tax issues.
Their work typically involves negotiation settlement, representation for IRS and criminal investigations, drafting and filing Offers in Compromise, and fighting criminal tax evasion charges.
As with any type of attorney, they charge a fee for their services, and understanding how they charge will give you an opportunity to avoid surprises or prepare yourself if you plan on hiring one.
This article will describe in depth what tax attorneys charge, what the typical and standard fee structure looks like, what elements are involved with cost variances, and how to think through the decision of whether or not you hire a tax attorney in the first place and how to consider the costs mentally.
Average Cost Of A Tax Lawyer In The U.S.
The average fee of a tax lawyer will depend on a number of factors: location, how long they’ve been in practice, and the specifics of your case. In the U.S., a tax lawyer generally charges:
- Tax attorney hourly rate: Between $200 and $500 an hour
- Flat fees: Between $1,500 to $6,500, depending on the services
- Retainer fees: Generally, from $2,500 to $5,000 for ongoing representation
While these are average cost of a tax lawyer, remember that a specialized tax lawyer with 20 to 30 years of experience can charge much more, especially a tax lawyer with experience negotiating high-stakes litigation or with experience defending a client in IRS criminal defense cases (criminal tax and other tax disputes to take place in a federal court).
In a lot of cases, a lawyer will offer free or low fixed-price consultation about your situation to give you an estimated scope of legal work and know how much it will cost (or if you intend to retain them).
Tax Attorney Hourly Rates
Hourly billing is the most common arrangement utilized by tax attorneys. You will be billed for every hour (or portion thereof) the attorney spends on your case, including research, drafting documents, calls, emails, negotiating with the IRS, and court/ audit appearances.
Most attorneys record time in 6 to 15-minute segments of time. For instance, if your attorney charges $350/hour and spends a half hour on a phone call with you, you would be charged approximately $175 for the phone call.
The positive aspect of tax attorney hourly rates is that you pay for actual time worked. The negative aspect is that costs can escalate quickly, especially in complicated cases or cases that take time to develop. If your case involves a lot of IRS correspondence or documents, then hourly fees can add up very quickly.
Flat Fee Tax Attorney Services
Some tax lawyers will offer flat fees, especially when dealing with standardized or limited-scope matters, meaning you pay one price for a specific legal project, regardless of how long it takes the lawyer to finish it.
Here are some popular flat fees tax attorney and some examples of what they typically cost:
- Filing an Offer in Compromise-$2,500 to $6,000
- Response to an IRS audit for 1 year-$1,500 to $4,000
- Negotiation for installment agreement-$1,000 to $3,000
- Request for penalty abatement-$500 to $2,000
- Tax return review and advice-$300 to $1,000
Flat fees tax attorney generally works best when you want some predictability in your budget, and are especially concerned with deliverables. But most cases (especially open-ended matters and litigated matters) do not lend themselves well to flat fees.
A retainer fee is a pre-pay that is essentially to ‘hold’ the attorney to work spent on your behalf. Retainers are common in longer or more complicated cases where it is hard to scope out the total work at the beginning.
Tax Lawyer Retainer Fees
A retainer is effectively a deposit made to the lawyer that will be drawn down as the lawyer bills hours. If the billable amount (the retainer) is completely drawn down, you will likely be asked to pay to replenish the tax lawyer retainer fees. Depending on the use of the retainer, some un-upon amount may be refunded afterward.
Example of a retainer in the context of a tax evasion defense case.
- A lawyer may charge a retainer of $5,000
- Which covers 10 – 15 hours of work at $350.00/hour
- If it resolves in 8 hours of work, a partial refund if available, may be sent.
- If it resolves at 20 total hours of work, you get a second invoice for the remaining work.
Retainers are most common in higher risk situations involving IRS criminal investigations, tax court experience, or business tax audits.
IRS Lawyer Fees by Case Type
The costs associated with legal fees can vary quite depending on the situation you are dealing with. Below are estimates of attorney fees for tax attorneys, based on case types:
|
Case Type |
Estimated Legal Fees |
| IRS audit representation | $2,000 – $7,000+ |
| Offer in Compromise negotiation | $2,500 – $6,500+ |
| Payroll tax dispute (business) | $3,000 – $10,000+ |
| Criminal tax defense / Tax evasion cases | $10,000 – $50,000+ |
| Tax court litigation | $5,000 – $20,000+ |
| Back taxes / Installment agreements | $1,500 – $4,000 |
These are just broad estimates. Many variables can change your total cost. The number of tax years involved, the amount in default, and whether or not the matter ultimately involves litigation, can all be issues that significantly increase the total cost.
Factors That Affect the Cost of Hiring a Tax Attorney
There are several factors that affect the average cost of a tax lawyer:
- Experience/qualifications: Tax attorneys with a lot of experience will charge more, but they may be able to resolve cases more quickly.
- Issues involved: Simple negotiations typically might be less expensive than complex, multi-year audits or a criminal defense case.
- Location: Tax attorneys working out of larger major metropolitan city may charge more than those in smaller regions.
- Billing type: Billing by the hour may result in a higher or lower total cost in relation to an all-inclusive fixed fee by the law firm.
- Urgency: Emergency or last-minute requirements may result in a premium fee for a lawyer to expedite services.
- Scope of services: The full range of services for a full legal defense will be more expensive than a document, simply writing a letter of consultation, or reviewing engagement agreements.
Always ask for a written fee-agreement or engagement letter to clarify any terms of how you will be billed prior to representation.
Final Thoughts
Tax lawyers are expensive but believe us when we say that they are more than worth the price, for many reasons, when it comes to dealing with the IRS. Whether it’s defending an audit or negotiating a settlement, they are protecting your finances, your documents, and your future.
If you understand how tax lawyers get paid, you will better be able to prepare and plan and ask the right questions and know what to expect with the costs involved. So if you’re dealing with back taxes, audit letters, wage garnishments or something much worse, hiring the best tax lawyers can save you far more than what you paid, no matter the cost.
If you are wondering how much tax attorneys charge? Then don’t be afraid to speak to a few lawyers and verify their background. Speak up and ask tough questions.
The fees and costs associated with using a tax lawyer should equate to value, and if you have made the best choice, you will not regret the price at all.