Tax problems tend to be hectic, especially when you are dealing with the IRS. Unpaid taxes, the audit, or just some complex tax issue you don’t know how to respond to can all push the pressure over the top. This is when you should ask yourself, when to hire a tax attorney? IRS procedures often make little sense, deadlines are strict, and the consequences of doing nothing can range from bad to very bad.
Trying to handle everything on your own can lead to costly mistakes. Thus, knowing when to seek your hired help from a tax attorney becomes a significant matter. A qualified tax lawyer’s intervention could take charge of the sit with efforts protecting your finances, reputation, and legal standing.
tax lawyer for back taxes differs from CPA tax preparers in that they offer legal advice and IRS audit representation. They will represent you in tax disputes, defend you during audits, negotiate with federal or state tax authorities, and provide protection in possibly graver matters-like investigations into tax fraud or evasion.
The guide will highlight key junctures when to hire a tax attorney. This guide will unfold on how tax attorneys compare to CPAs, and in addition, how to choose the right professional for their needs. Knowing what to do when can save you an awful lot of time, money, and stress.
What Is a Tax Attorney?
They can help with:
- IRS negotiations and settlements
- Tax litigation
- Business tax structuring
- Legal defense to fraud and evasion charges
- Tax relief programs, including Offers in Compromise
Tax lawyers can easily give you legal help for tax debt, meaning your communications will not be shared or disclosed, which is important where legal issues are involved.
When Should You Hire a Tax Attorney?
When do you know it is time to call a tax attorney? Hire a tax attorney when you have received any of these situations:
- You have received notice from the IRS and the notice indicates an audit or collection.
- You are accused of tax fraud or tax evasion.
- You have significant amounts of back tax or unfiled tax returns
- You are working on an offer in compromise help or payment plan
- You just received a wage garnishment notice.
- You have other tax legal problems related to business matters.
- You are about to commence tax litigation or tax court.
Typically, when you find yourself in one of these situations, taking some legal and professional measures to stop escalation or to regain control of your financial situation is the best course of action.
IRS Audit Representation: Don’t Do It on Your Own
An IRS audit representation can be daunting. The IRS can ask you for documents and items that go back years, and one tiny little mistake can lead to penalties.
This is definitely a time to get a tax lawyer involved. A tax attorney will:
- Represent you with the IRS directly
- Help you understand your rights
- Make sure your documents are in order
- Defend you if you are unfairly targeted
Many people think their CPA can handle it, but a CPA cannot offer full IRS audit representation and legal defense.
Managing Tax Debt and Back Taxes
If you have failed to pay your taxes or have failed to file tax returns, you may be facing penalties, interest, and possibly even enforcement action.
This is why you will need a tax lawyer for back taxes. A tax lawyer can:
- File your tax returns without any mistakes
- Negotiate down any penalties
- Consider Offer in Compromise or Installment Agreements
- Stop abusive voice-mailing and letters
Don’t wait for the IRS to put a line on your property or get a court to seize your bank account or other assets. The sooner that you engage someone to help you, the greater your choices will be.
In Burdened by Tax Debt? An Offer in Compromise May Help
An Offer in Compromise allows qualified taxpayers to pay tax debt for less than they owe. However, the application process is complex, and the IRS denies a lot of OICs when taxpayers do not have professional assistance.
An experienced tax attorney providing Offer in Compromise help will:
- Review your financial situation to determine if qualifying aspects are met
- Prepare form IRS Form 656 and attachments properly and timely while obtaining a signed taxpayer authorization
- Negotiate directly with the IRS
- File an appeal if the OIC is not approved
If you are experiencing financial hardship or have limited income, an Offer in Compromise may be your pathway to freedom, if the OIC is prepared and submitted properly.
Payroll Tax Disputes for Entrepreneurs
Entrepreneurs have a responsibility to withhold and remit employee payroll taxes. If you fail to pay them, the IRS may hold you liable personally, regardless of whether you were the one who handled payroll.
It’s time to consult with a payroll tax dispute attorney. They can:
- Defend you against Trust Fund Recovery Penalties
- Dispute employee misclassification
- Arrange a payment plan to clear payroll tax debt
- Represent you in federal or state tax court
Accused of Tax Evasion? Here’s How a Lawyer Can Standup for You
Tax evasion is a serious federal charge and can be prosecuted. Even mistakes and unintentional underreporting can result in investigations.
If you’re being investigated or charged, a tax evasion legal defense is vital, a tax attorney can help you to:
- Investigate the IRS’s assertions
- Craft a plan of defense
- Represent you in court
- Negotiate any plea deals if necessary
Don’t talk to any agents of the IRS without legal representation. Anything you say can be used against you.
Tax Attorney vs CPA: Who Do You Really Need?
A CPA and a tax attorney are both valuable professionals, and difference credentials.
|
CPA |
Tax Attorney |
| Prepares returns | Offers legal defense |
| Handles bookkeeping | Represents you in court |
| Gives tax planning advice | Negotiates with IRS |
| Cannot offer legal privilege | Attorney-client privilege applies |
If your issue is compliance-related (filing or deductions), a CPA may be sufficient. But if you’re having tax-related legal problems, such as tax debt, audits, and court appearances, a tax attorney is your best and only option when things get serious.
Selecting a Tax Lawyer
When you’re ready to hire a tax attorney here are some steps to the right fit:
Identify The Following:
- Demonstrated experience with representation during IRS audit representation
- Specific experience with business tax legal matters or personal tax defense
- Experience with both federal and state tax code
Demonstrated success negotiating Offers in Compromise help or Releases of Garnishment
Ask Questions Such As:
- Have you managed a case like mine before?
- What is your success rate when representing clients in negotiations with the IRS?
- Do you charge flat fees, or do you bill hourly?
Make sure you’re confident that they will protect your financial and legal interests.
The Bottom Line
The IRS is not a creditor you want to ignore. Interest accrues very quickly, and penalties can add up rapidly. Knowing the right time to hire a tax attorney, so you can head off tax issues before they turn into a legal crisis, is by far the most important step you will take.
Whether you are an individual dealing with back taxes or a business facing payroll tax disputes, hiring a qualified tax attorney will give you legal cover and leverage for negotiations.