Most people think they do not need to hire a tax attorney because they do not have a complex return or tax issue. They have a bookkeeper, accountant or CPA that handles all of their tax filings and answers all of their tax questions. They believe that attorneys are expensive and, in this difficult economy, that money could be used for a better purpose.
However, a tax attorney can be invaluable if you are facing any of the following situations:
- You received an audit notice. Due to their inexperience with the IRS, individuals have a tendency to provide too much information to IRS Agents. A tax attorney should be brought in to assist in resolving an audit. A tax attorney will provide only the limited requested information to the agent/auditor in an organized manner, which limits the amount of information that is exposed to IRS scrutiny.
- You owe the IRS more than $10,000. A tax attorney can work with you to set you up on an installment plan for a small monthly amount that you can afford. A payment plan is always based upon your current ability to pay and has nothing to do with the size of your tax liability. A tax attorney can also give you additional options, such as getting your account on a currently non collectable status or filing an Offer in Compromise to discharge your liability.
- The IRS is investigating you. If a special agent shows up at your work or home and starts asking questions, contact a tax attorney immediately. A tax attorney will help you understand your rights and duties, whether you or your business is the subject of a civil or a criminal tax investigation. You have an attorney-client privilege with your attorney that you would not have with your accountant or CPA.
- Your tax returns raise an audit red flag. A Tax attorney is constantly dealing with the IRS and is aware of common mistakes that tax return prepares make on individual’s tax return. A tax attorney can review your tax returns to advise you on the possible understatement of income or overstatement of expenses that could draw unwanted attention to your tax return.
- You want clarification on Employee taxes. Employers always have questions as to who is an employee or an independent contractor. If you are a business owner, are you an employee, an employer, or both? A tax attorney can explain the differences to you and the tax advantages and disadvantages of both options.
- You think you have committed tax fraud. A tax attorney can review your issues and tax information. He can also advise you as to your potential liability and the possible resolution to your potential criminal investigation.
- You are starting a business and want advice on structuring your new company (i.e., sole proprietorship, LLC or corporation). The most important part of forming a business is planning: what is your game play, what are your goals, what is your exit strategy? A tax attorney can be an independent third party who can give you honest advice on how to achieve all of your business long term and short term goals.
- You have a foreign bank account or you are involved in business overseas and need legal advice.
- You are dealing with a tax issues that you just do not understand. Federal, state and local tax regulations and laws are constantly changing, a competent tax attorney can ensure you have the most up to date information given to you.
Do not be concerned that the IRS or any government agency will be suspicious that you have decided to hire a tax attorney. In fact the opposite is true, the government can be reassured that you are taking this notice, audit, inquiry or investigation seriously and you are willing to work with them to resolve the issues quickly and efficiently. Whatever situation you are confronted with, it is always best to get organized and stay calm. A tax attorney’s years of expertise can help guide you through any of these difficult situations.
Please keep in mind the information and advice presented in this blog is not intended to be used as formal legal advice. Contact a tax professional for personalized tax advice pertaining to your specific situation. While we try and answer all parts of the question when we write our blogs, sometimes there may be some left unanswered. If you have any questions about your problems with the IRS, SBOE, FTB, or BOE, or tax law in general, call RJS Law at (619) 595-1655.