Tax law can be complex, so it’s important to consult with an expert in these matters before attempting to handle them on your own. Whether you’re looking at debt relief or managing the tax structure of a small business, a tax attorney can be an essential authority on the legal side of these issues. Even if you already have an accountant, a dedicated tax lawyer can be crucial in more complex scenarios or to provide additional reassurance before embarking on a new financial decision.
Below are some of the many situations in which a qualified tax attorney can prove beneficial.
Tax and Debt Relief
Tax debts can be especially complex due to the laws governing them. The tax code is an endlessly evolving and incredibly complicated legal document, and it can be a challenge to stay on the right side of tax law without unnecessarily sacrificing money that could rightfully have been yours.
For this reason, it’s always a good idea to speak with a tax professional when facing any issues related to tax debt. Whether you owe back taxes due to previous underpayment or are facing wage garnishments or a seized tax return due to other debts, trying to negotiate tax debt on your own is never a good idea.
An attorney can help you to understand the legal ramifications of different tax strategies to help protect you from acquiring tax debt to begin with. He or she can also represent you in legal matters with the IRS, handling correspondence or even representing you in court if necessary to settle tax debts.
Advice and Negotiation
When it comes to matters of tax debt, many people are surprised to discover that the IRS can and will negotiate the debt owed and terms of repayment. However, these negotiations are not simple, and they are unlikely to be successful if you pursue them without the assistance of a qualified and experienced attorney in your corner.
Depending upon your circumstances, you may be able to request an extension or payment plan to allow you to pay your owed taxes. It is also possible to apply for an offer in compromise, which allows you to pay the IRS less than you owe.
While these offers can be negotiated on your own, the advice and guidance of a tax attorney can be invaluable. An attorney will help you to understand your options and provide you with reasonable expectations about the next steps in the process.
Perhaps most importantly for the average taxpayer, an attorney can handle the arduous process of compiling paperwork, answering phone calls and negotiating the terms of repayment. Dealing with the IRS can be stressful, and having a lawyer you trust in your corner will cut down on the amount of contact you must make with the IRS directly. This can alleviate stress in your life and allow you to focus on other things.
Be prepared, however, to be diligent in your search for an attorney. It’s often best to find a tax attorney before you end up in too much trouble with the IRS as there are unscrupulous or dishonest attorneys who prey on people with substantial tax debts. Beware of any lawyer who seems to specialize in such vulnerable cases, and be sure to research that attorney’s reputation thoroughly before signing on to work with him or her.
What Can a Lawyer Do for You
A tax attorney is helpful in many situations, not just when back taxes are owed. Depending on your circumstances, you may find that consulting with an attorney is an important first step in any major financial decision that may have tax ramifications.
In some ways, an attorney can fulfill the same role as an accountant or CPA. Your lawyer can provide financial advice in certain situations, explaining tax law and helping to guide you toward the best decision for your individual needs. This is especially helpful when you are considering investment options, opening a business or otherwise making a large financial choice that could have serious tax ramifications.
Other things an attorney can assist with include:
- Filing appeals with tax courts
- Representing you in court if necessary
- Working as a liaison or go-between with the IRS
- Negotiating the terms of tax debt repayment
- Identifying available tax credits and opportunities to save money
- Helping you to structure a business in the best way to reduce your tax burden
Depending on your situation, your tax attorney may become a trusted source of financial advice and assistance that you work with each year or at important times in your life. In other cases, an attorney may only be needed once or twice.
Regardless, the most important thing when searching for a lawyer is to research their firm and get an idea of their experience, qualifications and scope of practice. This will allow you to choose an attorney who best fits your needs. By taking the time to find an experienced attorney, you can protect yourself from costly and time-consuming financial mistakes and receive much-needed support during difficult times.
The Difference Between a Tax Accountant and Attorney
Although a tax lawyer can fulfill many of the same duties as an accountant or CPA, the two are not interchangeable. You may require the aid of both types of professionals for some purposes. By understanding the differences between these tax professionals and what each can offer, you can make the right choice for your individual situation.
A Tax Attorney
As noted previously, a tax attorney can assist with a number of financial decisions and tasks related to taxes. However, the primary role of an attorney is to handle the legal aspects of tax disputes.
A tax lawyer will have pursued a legal degree and will operate a legal practice. In some cases, tax lawyers may also handle related types of law services, such as estate planning. A tax attorney will have completed a state bar exam and should have experience in handling legal cases and situations similar to those you may face.
A Certified Public Accountant
A certified public accountant, or CPA, is a professional in the business of accounting and taxation. As professionals, they’ll have a better understanding of the tax code and laws related to issues of taxation. However, they are not qualified to represent you in legal matters and may not have the authority to assist in every situation.
Your CPA’s primary job should be to guide you through financial decisions and assist you with the often difficult tasks of planning business finances, choosing investments and filing taxes. You can hire a CPA to help with issues of tax planning, including establishing a trust, planning an estate, managing business expenses and finding opportunities to save money on your annual tax bill.
Which Is Best for You?
For basic day-to-day activities, a CPA may be sufficient and may indeed by the superior choice. You should utilize an accountant to help with annual tax preparation as well as accounting and personal finance tasks.
If you find yourself in trouble with the IRS, you will need a tax attorney to assist with legal defense. Your attorney can represent you in the court system and work as a liaison with the IRS; an accountant cannot do this. However, your CPA can work alongside your attorney during legal proceedings to ensure that documentation is collected and filed correctly and to answer questions about the state of your finances.
In some cases, it may be advantageous to work with both an attorney and an accountant. For example, if you are setting up a business, you may wish to speak with the accountant to determine the best financial strategies for success while utilizing the lawyer’s expertise in establishing the proper business entity. If you are ever in doubt about the best way to proceed in any sort of financial or legal issue, consulting with an experienced tax attorney is always a good idea.