If you are planning to hire a tax attorney, it is important to know when it is worth it to hire a tax attorney, what to consider, and what the differences are between a tax attorney and a CPA. In this blog, we will discuss all of these topics so that you can make the best decision possible when it comes to hiring a tax attorney.
What Is a Tax Attorney?
A tax attorney is a legal professional who specializes in helping individuals and businesses navigate the complexities of the tax code. Tax attorneys are knowledgeable in various tax-related matters, including tax planning, tax compliance, tax controversy, and tax litigation. In addition, they can help with both state and federal taxes, and represent clients before the IRS and other tax authorities.
What Do They Do?
- Tax attorneys are responsible for representing their clients in matters involving federal, state, and local taxes. They provide legal advice and assistance to individuals, businesses, and organizations in a wide variety of tax-related matters.
- They advise clients on how to properly structure and manage their taxes to ensure compliance with all applicable laws and regulations.
- Tax attorneys provide advice and services related to the filing of tax returns, the proper payment of taxes, the avoidance of tax penalties, the resolution of tax disputes, and the pursuit of tax credits and deductions. In addition, tax attorneys prepare and review documents related to business transactions, such as mergers and acquisitions, as well as handle estate planning and other matters involving taxes.
- These tax lawyers often represent taxpayers and their clients in court proceedings as well.
When is it Necessary to Hire a Tax Attorney?
- Complicated Tax Situation: If you are dealing with a complex tax situation, such as a large portfolio of investments, multiple income sources, or a business, it is often worthwhile to hire a tax attorney. They can help you understand the complexities of the tax procedure and make sure that you are taking full advantage of all available deductions and credits.
- Business Tax Issues: Tax issues that involve businesses can be extremely complicated. A tax attorney can provide advice on the best way to structure the business, choose the right accounting methods, and help with filing any necessary forms.
- Tax Planning: An attorney can provide guidance on how to structure investments, set up trusts and other estate planning tools, and draft wills.
- Tax Audits: An attorney can help prepare for an audit and represent the client in the event of an audit.
- International Tax Issues: In case of any international tax issues, a tax lawyer can help navigate the complexities of different tax laws in different countries.
- Disputes with the IRS: Tax disputes with the IRS can be complicated and time-consuming. A tax attorney can help to navigate the process and determine the best course of action to take.
- Significant Penalties or Interest: If you owe a large amount of money to the IRS, an attorney can help you negotiate a payment plan or reduce the amount.
- Estate Tax Situation: Tax attorneys also have specialties in areas such as estate planning. So if you are facing a complex estate tax situation, then it is probably worth it to hire a tax lawyer.
Criteria to Consider
When looking for a tax attorney, it is important to consider the following factors:
1. Experience: A tax attorney should have extensive knowledge of tax laws and regulations in your state. They should have a good understanding of the federal tax code. They should also be familiar with any special tax exemptions or deductions that might apply to your particular situation.
2. Qualifications: Make sure the attorney is qualified and licensed to practice law in the state where you live. You can visit the state’s bar association website to confirm his/her license. Also, ask if the attorney has any special certifications or licenses related to tax law. You should check if they are members of the American Bar Association Tax Section or other similar organizations.
3. Tax Identification Number (PTIN): All tax attorneys should have a valid preparer tax identification number (PTIN). This number is issued by the IRS and is proof that the attorney has passed the IRS’s competency exam. The PTIN is also used to verify the accuracy of the returns prepared by the attorney. Having a valid PTIN is a sign that the attorney is up-to-date on the latest changes in laws and regulations.
Comparison Between a Tax Attorney and a CPA
Tax attorneys and CPAs are both professionals who specialize in tax law, but they have different roles. And it is important to understand the difference between them. A CPA is a certified public accountant who can help you prepare your tax returns and provide financial advice. A tax attorney is a lawyer who specializes in tax law and can provide legal advice and representation in IRS matters.
Cost of Engaging
Generally, legal services are expensive. However, the cost of a tax attorney will vary. It will depend on the complexity of the situation and the amount of time they needed for your case. In general, you should expect to pay between $200 and $500 per hour for an experienced attorney.
This season can be stressful, but hiring an attorney can help to make the process easier. If you have a complex tax situation or are facing an audit or dispute with the IRS, it may be worth hiring a tax attorney. Make sure to do your research and find an experienced attorney who is well-versed in current tax laws.