When Do You Need a Tax Attorney?

During the fiscal year 2022, the IRS only audited 3.8 out of every 1,000 returns (0.38%). So, if IRS audits are relatively rare, what do people hire tax attorneys for? 

According to the United States Senate Committee on Small Business & Entrepreneurship, small businesses spend up to 2.5 billion hours each year, ensuring they comply with IRS rules and regulations. While the data is a little old, a 2015 survey of small business owners reveals that 40% think that tax preparation and bookkeeping are the worst part of owning a business. Tax attorneys can help tremendously with bookkeeping and tax preparation for businesses. Here are a few situations in which you might benefit from hiring a lawyer.

Reasons To Hire a Tax Attorney

A tax attorney specializes in tax law and is generally most helpful in the event of complicated tax returns. Here are some situations in which you might need the assistance of a tax lawyer instead of an accountant. 

Tax planning for significant assets

If you have big assets, your tax lawyer can use their expertise to develop strategies and minimize your tax liability. These strategies could include restructuring transactions, using tax deductions and credits, and taking advantage of other tax planning opportunities. 

Tax audits

As mentioned above, IRS audits are relatively rare. However, if you are facing an audit, a tax attorney is a worthwhile investment. Your lawyer can represent you and help you navigate the process, even responding to IRS inquiries and gathering documentation for you. The best part is that they can negotiate with tax authorities to resolve discrepancies, and you don’t have to be involved.

Tax compliance

Tax law is complicated, to say the least. If you have a business with international tax obligations, it gets even more unwieldy. Tax attorneys can help you understand and fulfill your tax obligations to ensure compliance with regulations. You might need to comply with certain regulations specific to your industry or circumstance, so a tax lawyer can help you figure that out.

Tax litigation

While rare, if a tax dispute escalates to the point of legal proceedings, a tax lawyer is all but a necessity. They can represent you and advocate for you. A tax attorney will prepare legal arguments, present your case in court, and negotiate any settlements on your behalf.

Corporate restructuring

If you are restructuring your business, a tax attorney can provide advice on tax implications. They can help structure a merger or acquisition or make sure that any deals are tax efficient. If you are planning a big or complex transaction, a tax lawyer can be helpful in that situation as well.

Estate planning

If you’re worried about how taxes might affect your estate, a tax lawyer can help develop a plan that minimizes taxes on the estate and ensures a smooth transfer of wealth to your heirs. They can also assist with setting up trusts and navigating complex estate laws.

Criminal tax issues

In cases involving suspected tax fraud, evasion, or other serious criminal tax offenses, it is crucial to have the representation of a tax attorney. They can provide legal defense, protect your rights, and guide you through the criminal investigation or prosecution process.

Winning the lottery

Winning the lottery or a large gambling win can lead to complex tax implications. However, the need for a tax attorney depends on the specific circumstances of your winnings and your individual financial situation. For example, if you receive a large jackpot or it has a complex payment structure, a tax attorney can help you minimize your tax liability over time, but it’s not necessary to hire one.

Starting a business

While it’s not a requirement, hiring or consulting with a tax attorney can help you if you’re starting a new business. For example, they can help you choose the right business structure for your financial situation. An LLC and a sole proprietorship have vastly different tax implications, so you’ll want to make sure that your business is set up to benefit you the most.

You can also have your tax attorney help you register for various obligations like obtaining an Employer Identification Number (EIN) and registering for state and local taxes. 

How To Find a Tax Attorney

At Expertise.com, we research and list the best professionals in a variety of industries. To find a top-rated tax attorney in your area, browse the listings and read reviews and ratings. Once you have identified a tax attorney who meets your criteria and seems like a good fit, reach out to them using the provided contact information. 

You can visit the provider’s website for more information or use our concierge service to call the provider for you. You should schedule an initial consultation to discuss your needs, inquire about their fees, and determine if they are the right choice for your specific tax-related concerns.

Remember to conduct your own research before choosing a tax attorney. Check their qualifications, licenses, and any disciplinary history. Additionally, consider seeking recommendations from trusted sources, such as friends, colleagues, and family.