When should I hire a tax attorney?

A tax attorney may be required if you are facing a fraud investigation, a lengthy audit, an audit involving legal issues, frozen assets, a large deficiency balance, incomplete or inadequate books and records, an inability to pay, a failure to file returns for a number of years, charges for taxes you do not owe, or the expiration of the statute of limitations. If you have any questions about the IRS, or are facing IRS action, it will be in your best interest to consult a tax attorney about your specific case.

Tax Attorneys and Audits

Most IRS audit issues can be resolved without the use of a tax attorney; when you receive your first audit notice from the IRS, respond accordingly and immediately. Be complete and honest with your answers and wait for their reply. Additionally, if required, pay the outstanding balance using the return envelope given in the notice. It is always better to pay immediately if you do owe the IRS money because interest will continue to accrue if any payments are avoided.

If the audit proceeding involves legal issues, it is always best to hire a tax attorney. Examples of legal issues in an audit include allegations of tax fraud or tax evasion. Also, any audit involving business-related taxes, such as payroll or sales tax investigations, should always be handled by an attorney. Finally, if the audit has been completed, but you disagree with the ruling and are planning to appeal, you should use a tax attorney.

Other Issues for a Tax Attorney

A tax attorney may also be useful if you intend to negotiate a tax settlement or payment plan with the IRS. This is an especially important role for a tax attorney because settlements and payment plans must be fully documented and signed in order to avoid further tax liability and collection attempts. In any situation where you dispute taxes owed, or cannot pay your taxes, and the IRS is pursuing you, then a tax attorney can assist you.

Tax attorneys can also be used to prevent tax problems from happening in the first place. If you have questions about keeping accurate business records, payroll tax, what constitutes taxable income, complex deductions, or any other potential tax confusion, you can work with an attorney to ensure that everything is done correctly and in a way that will not result in problems down the road. An experienced tax attorney is sometimes more useful as a means of avoiding problems than as a means of fixing them.

Case Studies: Tax Attorney’s Role in Legal Matters

Case Study 1: Fraud Investigation 

John, a business owner, received an IRS notice accusing him of tax fraud. Concerned about the potential consequences, John promptly hired a tax attorney to protect his rights and navigate the intricate legal process, ensuring a fair resolution.

Case Study 2: Challenging an IRS Ruling

Sarah, a freelance artist, faced an unfavorable IRS ruling after an audit of her income taxes. Dissatisfied with the outcome, she enlisted the expertise of a tax attorney to guide her through the appeals process, presenting a compelling case for a fair reconsideration.

Case Study 3: Negotiating a Tax Settlement 

Mark, a self-employed consultant, found himself unable to settle his substantial tax debt. Seeking relief and a viable solution, he engaged a tax attorney who skillfully negotiated a favorable tax settlement and structured a manageable payment plan for Mark’s financial stability.