Tax Relief Attorney Explained
If you have concerns about your ability to pay your tax bill, the idea of spending money on hiring a tax relief attorney may seem out of the question. However, if you have thousands of dollars of unpaid back taxes, are struggling with the burden of navigating tax collections, or are potentially involved in a criminal tax case, having an experienced tax relief lawyer can put your mind at ease.
TABLE OF CONTENTS
What Is A Tax Relief Attorney?
Tax Lawyer Specializations
How Do Tax Lawyers Help With Tax Relief?
Tax Debt Resolution Options
When Is It Beneficial To Hire A Tax Attorney
Types Of Tax Professionals
How To Choose The Best Tax Relief Attorney
How Much Does It Cost To Hire A Tax Relief Attorney?
Is It Worth It To Hire A Tax Lawyer?
Key Takeaways:
- A tax relief attorney is a tax law specialist who can assist clients in resolving tax issues in their states or at the federal level with the IRS.
- Tax relief attorneys can pursue additional education to become specialized in tax issues such as tax audits, appeals, delinquent federal income tax returns, unfiled federal income tax returns, installment agreements, offers in compromise, tax penalty relief, tax levies, tax liens, and wage garnishment.
- Tax relief lawyers are bound to the attorney-client privilege, which makes all communication between the taxpayer and their lawyer strictly confidential. It can be beneficial if taxpayers are being investigated for tax crimes or are using tax strategies that push the boundaries of tax laws.
What Is A Tax Relief Attorney?
Tax relief attorneys are lawyers who specialize in tax law, assisting clients in resolving their tax matters with the IRS or another local or state tax agency. Their expert knowledge of the Internal Revenue Code (IRC) and tax laws allow them to guide taxpayers throughout the tax relief process so they can save the most money in tax payments.
Tax Lawyer Specializations
While tax relief attorneys may take on cases for a variety of tax issues, there are specialist tax lawyers who provide tax services to clients through specific tax situations.
- Tax audits
- Delinquent federal income tax returns
- Unfiled federal income tax returns
- Installment agreements
- Offers in compromise (OIC)
- Tax penalty relief
- Tax levies
- Tax liens
- Wage garnishment
How Do Tax Lawyers Help With Tax Relief?
- Researching the tax debt relief options specifically related to the taxpayer’s tax situation
- Communicating and negotiating with the IRS on behalf of the taxpayer
- Representing the taxpayer in court
- Finding the IRS debt forgiveness option to save the taxpayer money
Tax Debt Resolution Options
One of the things tax relief attorneys can do to help taxpayers in the navigation of their tax debt is to help them apply for the IRS Fresh Start Program.This tax relief initiative was created by the IRS to help a lot of eligible taxpayers with a clean history with the IRS to resolve their tax debt in a manageable program that does not worsen their financial situation.
The four main pillars of the IRS Fresh Start Program are:
Installment Agreements
An installment agreement allows taxpayers to pay back their tax liability with a monthly payment plan instead of submitting a lump sum payment.
Offers in Compromise
An offer in compromise allows qualifying taxpayers to settle their tax debt for a lower amount than was initially owed.
Currently Non-Collectible Status
If taxpayers are approved for currently non-collectible status, also known as IRS financial hardship status, they do not have to make tax payments and cannot be targeted for collections until the hold on their account is removed.
Penalty Abatement
Taxpayers who have accrued significant tax penalties may qualify for IRS fresh start penalty relief which can directly lower their tax bill.
When Is It Beneficial To Hire A Tax Attorney?
It can be beneficial to hire a tax relief attorney during the following situations:
Tax Audits
An IRS tax audit is when companies or individuals are reviewed to ensure their tax accounts and financial documentation is reported accurately and that the corresponding tax balance is correct. During an audit, the taxpayer must allow the IRS access to all of their financial records, so having a tax relief attorney to assist them through the audit can ensure their rights are protected.
Tax Court
Individuals and businesses who are required to attend tax court for their tax problems would benefit from onboarding a tax attorney as they can find comfort in knowing that their lawyer can advocate for them in front of the IRS or government and implement the best strategies to achieve an optimal tax solution.
Tax Evasion
Tax evasion, the illegal, deliberate failure to pay or intentional underpayment of taxes, can have serious penalties ranging from significant fines to up to five years of jail time. Hiring an experienced tax attorney can help taxpayers understand their rights and potentially reduce IRS penalties if they are able to provide evidence that the underpayment of taxes was unintentional.
Tax Fraud
Tax fraud, the intentional attempt to evade taxes or unlawfully misrepresent tax information to the IRS, is a felony that can result in significant fines and prison time.
IRS Criminal Investigation
Taxpayers who are being investigated or accused of a tax crime should consider hiring an experienced tax attorney to help them with everything from researching their case to representing them in court.
Offshore Disclosure Compliance Issues
In the situation when taxpayers fail to disclose their offshore accounts or inaccurately report the value of their foreign assets, there are serious criminal and civil penalties. Taxpayers who are under investigation for offshore disclosure noncompliance would highly benefit from having a tax attorney helping them to reduce their charges and get their accounts in order.
Unfiled Federal Income Tax Returns
If a taxpayer fails to file one or more of their federal income tax returns, there can be a range of consequences, especially in the situation where they also owed taxes at that time. Depending on the complexity of the case, hiring a tax relief attorney or another licensed tax professional can be valuable in helping them through the actions of filing late tax returns and minimizing the penalties of failing to file.
Unpaid Tax Liabilities
Tax relief attorneys can help taxpayers understand the best choice to make when it comes to resolving the issue of unpaid tax liabilities. From paying the tax bill to negotiating with the IRS to establish an alternative settlement solution, people can feel confident that they are making the best decisions to save money when following the advice of an experienced tax lawyer.
Tax Penalties
A tax bill can significantly grow due to tax penalties that are added due to failing to file a tax return or failing to pay or only paying a portion of the tax liability. Qualified tax attorneys can utilize their in-depth understanding of IRS tax law to determine if there is a way to reduce the amount of the taxpayer’s tax bill.
Tax Liens
A tax lien allows the IRS or another government agency the legal right to claim a taxpayer’s assets when they have an unpaid tax liability. Tax relief attorneys can be significantly helpful when dealing with tax liens as they have the qualifications and experience to offer recommendations about alternative settlement options that can prevent their assets from being seized.
Tax Levies
A tax levy is when the IRS follows through with the process of seizing a taxpayer’s assets to secure payment for any unpaid taxes they owe. The types of assets that the IRS can legally seize during a tax levy include real estate, property, vehicles, wages, and bank accounts. If someone is facing tax levies, utilizing the guidance of a tax relief attorney can help them avoid the seizure of their assets and find other ways to resolve the tax problem.
Individual Or Business Tax Controversy
Tax controversies for individuals, such as audits, back taxes, and unfiled tax returns, can lead to penalties and other consequences that a tax relief attorney can help reduce. Businesses with tax controversies have the potential to close down the company, so by utilizing a tax attorney, business owners can work to make changes that result in a less severe outcome.
Types Of Tax Professionals
Tax Attorneys
Tax attorneys utilize their thorough knowledge of the tax code to help clients resolve complicated tax problems, save money on tax payments, provide IRS audit representation, as well as represent them in court. Working with a tax relief attorney also comes with the attorney-client privilege that legally holds all communication between the taxpayer and their lawyer confidential. Tax lawyers, however, do not offer tax preparation and filing assistance, and tend to have higher fees than other types of tax professionals.
Tax attorneys become qualified by obtaining a bachelor’s degree, passing the Law School Admission Test (LSAT), and earning a Juris Doctor (J.D.). Tax lawyers often continue their education by earning a Master of Laws in Taxation degree (LLM). Finally, tax lawyers must pass the bar exam in the state where they wish to practice law.
Certified Public Accountants (CPAs)
A certified public accountant (CPA) is a tax professional with a bachelor’s degree in accounting and sometimes a related master’s degree. CPAs can assist taxpayers in preparing and filing their federal income tax returns, offer advice on tax credits and tax deductions, and help taxpayers find solutions to issues related to unpaid back taxes.
While there are many situations in which CPAs can use their expertise to provide meaningful tax help, these tax pros are unable to represent taxpayers in court. If an individual is facing a tax problem when they are going to court, it is recommended instead to use a tax attorney.
IRS Enrolled Agents
Enrolled agents are certified tax professionals who can represent taxpayers before the IRS. These tax experts gain their licensure through experience working at the IRS or by passing a three-part comprehensive IRS test about business and individual tax returns.
Enrolled agents can help with tax preparation and filing and they can also represent taxpayers in court as a U.S. Tax Court Practitioner (USTCP) if they pass a special test.
How To Choose The Best Tax Relief Attorney
When conducting research about which tax lawyer would be the best fit to find a solution to their tax problem, taxpayers should consider various factors before making their decision. There are several factors taxpayers should consider when deciding which tax lawyer to hire to help resolve their tax case.
Local Vs. Remote
Hiring an attorney from a local law firm has the benefit of allowing you to visit their office and meet with them in person, as opposed to handling all communication online or over the phone. Local law firms also provide the convenience of being able to sign paperwork in person. Additionally, local attorneys will be well-versed in the tax laws of your state.
While there are conveniences of hiring a tax attorney from a law firm in their area, this close location could result in a smaller pool of lawyers to choose from who potentially lack the specific experience related to the tax situation.
General Vs. Specialized
The best tax attorney will be the lawyer with the most experience handling the specific tax issue the taxpayer is experiencing. Whether they are undergoing investigations during a tax audit, navigating estate and trust tax planning, or have a tax situation that requires the comprehensive knowledge of tax rules only tax attorneys can understand, it is beneficial to choose a professional with previous success stories in those areas.
Recommended Firms
Navigating the countless options of tax relief attorneys to help taxpayers through their tax problems can be more accessible when turning to the recommendations of a family member or another person who has experienced success in reaching a tax resolution using a tax relief specialist.
Listening to advice from others can help taxpayers find the top lawyer for their situation with a high level of customer service so they can achieve the tax results they need.
Free Consultations
Many law partners offer a free initial consultation where taxpayers can meet with their prospective lawyer, present their tax documents, and ask any questions to determine if they are a good fit for the case. Taxpayers should take into account that the reason for this meeting is to list any concerns about the hiring process and weigh the pros and cons of working with this tax team.
How Much Does It Cost To Hire A Tax Relief Attorney?
The price of hiring tax attorneys depends greatly on the experience of the tax professional, the type of tax case, and the process required to resolve the tax issue. While many lawyers offer free consultations for the initial meeting, any communication and meetings thereafter will likely utilize their hourly rates, which can average hundreds of dollars per hour. Depending on the complexity of the case and other factors impacting how long it will take to resolve the tax matter, the fees for hiring a tax lawyer could potentially exceed $10,000.
While this investment may seem high, obtaining quality assistance from an experienced tax professional can result in more effective tax resolution procedures that lower the taxpayer’s tax bill and ultimately save them money.
Is It Worth It To Hire A Tax Lawyer?
Deciding whether it is worth the investment of hiring a tax attorney to assist with your tax problems depends greatly on the circumstances of the specific case.
Here are some situations in which you must consider hiring a professional tax attorney:
- You want help with handling your tax case with the IRS to ensure your best outcome.
- You owe the IRS a tax debt of over $10,000.
- You failed to file your federal tax return more than once.
- You have tax penalties from the IRS.
- You are experiencing wage garnishment.
- There are tax liens placed on your assets.
- Your assets are being levied.
Hiring a tax relief attorney to be on your side as you navigate tax problems could be the thing that allows you to save hundreds, if not thousands of dollars in tax payments, in addition to reducing the stress of handling it all yourself. If you have an interest in working with a tax relief attorney, contact our professionals here at Ideal Tax.
Luis serves as the Director of Operations for Ideal Tax, overseeing a multifaceted team including case management, tax professionals, document specialists, customer support, training, and development.
