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When to Hire a Tax Attorney

By Chris Bibey

hire tax attorneyYou never know when you will be faced with a complex tax situation that calls for outside help. If you are lucky, this will never happen to you. But unfortunately, there is no way of knowing for sure. There may be a time when you’ve fallen behind on your taxes, and now you’ve got the IRS pounding down the door to collect. This situation can get pretty scary because no one wants to deal with the IRS! You can handle a lot of tax situations on your own, but there are some special personal cases and many other cases if you own a business where hiring a tax attorney makes sense. Also, don’t get a tax attorney mixed up with a certified public accountant (CPA). CPA’s specialize in tax preparation and can answer tax questions you might have. A tax attorney comes into play generally when there is some sort of legal issue regarding your taxes. If you ever face any of the following situations it may make sense to hire a tax attorney:

1. Are you being audited by the IRS? In this case, you may need legal representation. The job of a tax attorney in this situation is to help you negotiate a settlement with the IRS. In other words, they can help you settle your debt for less. This can be done in many ways, including an offer in compromise, penalty abatement, or installment agreement. Be aware that offers in compromise are VERY rarely accepted by the IRS. You need to have a really good hardship story and show that you have absolutely no money and very little assets.

2. If the IRS is pursuing criminal charges, you definitely need a tax attorney. This is a very serious situation, and one that you do not want to handle on your own. There are times when the IRS has no choice but to pursue criminal charges. Generally speaking, this is the result of income tax evasion. You are required by law to pay income tax. If you don’t, the IRS will take begin to send you notices. The longer you go without responding or paying the more it appears that you are hiding.

Along with the above, you may need a tax attorney if you are accused of tax fraud.

The last thing you want is to end up in prison and/or be slapped with large fines. While you may not be able to avoid all trouble, your tax attorney can help reduce your penalty.

3. Do you need somebody to communicate on your behalf with the IRS? A tax attorney can help in this situation. If you sign a power of attorney, your attorney is able to communicate directly with the IRS so you don’t have to. This can go a long way in reducing some of the stress that has been put on you.

4. Receiving a CP Notice can be scary. This is a letter/notice from the IRS that is often times sent to inform you of a balance due (although this is not always the case). For instance, a CP 501 is also known as a “Reminder Notice – Balance Due.” If you don’t understand a CP Notice or are worried that this could turn into a bigger issue, consulting with a tax attorney is a good idea.

Should I contact a tax attorney with questions about my return? As I mentioned at the beginning, while tax attorneys know a thing or two about filing returns, they are not the right person to contact. If you need this type of help, you are best off hiring a certified public accountant (CPA) or tax preparation professional. They specialize in tax returns. A tax attorney specializes in tax law.

If you find yourself having to hire a tax attorney, there is probably something wrong. The four situations above often times call for the help of an attorney. Rather than continue to wait, contact an experienced professional and let them help you figure out which steps to take next.

(photo credit: Freedom To Marry)

Chris Bibey
Chris Bibey is a freelance writer who over the years has honed his personal finance experience by writing more than 100 feature articles on the subject. In his spare time, Chris enjoys sports - West Virginia football in particular!

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  • Sasha

    I just stumbled across this blog today and I am enjoying it immensely. I like your writing style and the way you present information in a down to earth, layman’s term fashion.

    I think it’s worth mentioning that if the taxpayer has an enrolled agent prepare the return, that preparer is certified to represent them in front of the IRS concerning the return. Also, EAs are certified with the IRS to prepare high quality returns for business and individual returns.

  • Joe

    Just wondering.i owe the irs $6000 and was wondering if there used anything that can need be done to get that reduced. I owe that for a year I got audited back in 09.but my tax refund for that year was $1000.why did it amount to so much money?

  • JulieD

    Hiring an Enrolled Agent would be far more cost-effective and maybe even more successful.

  • Westcoaster

    Joe — FYI, the image of the “tax attorney” on this post is actually California Governor Jerry Brown.

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