Every transaction you’re involved in will include taxes in some form or another. Income tax, sales tax, property tax; paying taxes is one of our most prominent responsibilities as American citizens.
In most cases, our tax matters can be handled by accountants or accounting software. The question is: when do you need a lawyer for taxes? There are a number of different scenarios that call for a tax lawyer, which we’re going to discuss below.
What is the Role of a Tax Attorney?
Tax attorneys serve two purposes: They guide individuals through tax-related situations, offering insight every step of the way, and they defend individuals against entities such as the IRS, ensuring that they get a fair shake in court.
While some tax attorneys provide tax-related services of all types, many of them specialize in one area or another. For instance, while one may only provide assistance to those planning their estates, another might only defend those who are being audited by the IRS.
How Does a Tax Attorney Differ from a Tax Accountant?
Both tax attorneys and tax accountants can provide solid tax advice. However, where they differ is in their knowledge of intricate tax law. While tax accountants have an excellent understanding of standard tax processes, they don’t typically have the knowledge base necessary to wade through complex legal tax matters.
Tax attorneys, on the other hand, do. They’ve studied tax law in law school, have passed the bar exam, and have demonstrated a thorough knowledge of the subject in its entirety. As such, when it comes to non-standard tax issues, they’re the ones to turn to.
When Do You Need a Lawyer for Taxes?
Not everyone needs a tax attorney and most that do only need one for a short while. In any case, these are some situations in which a tax attorney is recommended.
When You’re Starting a New Business
Are you starting up a new business venture? If so, it might be a good idea to speak with a tax attorney.
Business taxes can be complex. If you’ve never owned a business before, you probably don’t know the first thing about them. A tax attorney can bring you up to speed, all the while ensuring that you handle your taxes in a legally proper manner.
When You’re Planning a Particularly Complex Estate
In the vast majority of cases, estate planning can be handled by an estate lawyer. However, if you own a number of different types of assets, your estate tax situation could become fairly complex.
As such, it might be a good idea to supplement your estate lawyer with a tax lawyer. A tax lawyer can help to find financial loopholes in your estate, softening the blow of estate taxes when they’re finally levied.
When You’re Being Audited
The absolute most important time to hire a tax attorney is when you’re being audited by the IRS. An IRS audit could go on to have a severe negative impact on your life. It’s not exactly something you want to play fast and loose with.
A tax attorney will help you through the auditing process, assisting you with paperwork and building a case in your favor. By paying for a lawyer early in the process, you could end up saving yourself substantial amounts of money in fines and fees.
How Much Does a Tax Attorney Cost?
The costs of tax attorneys vary wildly from individual to individual. Factors that affect an attorney’s rates include experience, case history, and reputation, to name just a few.
The vast majority of tax attorneys charge hourly. Their rates tend to fall somewhere between $200 and $400 an hour.
Note, though, that some attorneys will charge additional fees as well. This is particularly true if you’re keeping them on retainer.
Choosing the Right Tax Attorney
Whether you’re facing tax-related legal trouble or are just hoping to stay on the straight and narrow with your taxes, choosing the correct tax attorney is imperative. When making your choice, look for the following.
Admittance to the State Bar
First and foremost, make sure that your tax attorney has been admitted to the state bar. Some states allow attorneys to practice without having passed the bar exam. But if an attorney has not passed the bar exam, he or she has not proven his or her skill or expertise to the extent that you should trust him or her with your tax matters.
Compatible Specialization
While some tax attorneys are generalists who will offer tax-related services of all kinds, many are specialized in one or two areas. You’re advised to choose the latter.
Of course, when doing so, you need to make sure that your chosen attorney’s services actually align with your needs. For instance, if you’re looking for a tax attorney to help you open your small business, you probably shouldn’t seek the assistance of IRS tax lawyers. While they both provide tax-related assistance, they ultimately serve different roles.
Reasonable Rates
You can only afford what you can afford. As was reviewed above, tax attorneys’ rates fluctuate wildly. As such, not all of them will reasonably be available to you.
Set a budget and stick to it. Then, find an attorney whose rates fit within that budget. Regardless of your budget, you should be able to find an attorney who knows what he or she is doing.
Looking for More Tax Info?
And there it is, that’s everything you need to know about when you need a lawyer for taxes. Whether you’re entering a major tax-related venture, or are on the cusp of tax-related disaster, a tax lawyer can provide you with the assistance you need.
Looking for more tax info? You can find it right here at our website. Browse our other tax-related articles now!
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