Hiring a Tax Attorney

In an ideal world, every tax paying citizen would file their state and federal income tax returns on April 15^th of each year and be done until the next April 15^th rolled around. However, the world is far from ideal, particularly when an income tax authority such as your state department of revenue or the Internal Revenue Service is involved. Unfortunately the income tax filing process can sometimes lead to additional problems with a variety of penalties, ranging from fines to jail time if timelines and procedures are not followed. In the event you encounter problems with any taxing authority, the worst thing you can do is ignore the problem. The best thing you can do is to immediately consult a qualified legal professional to assist with the problem. Do not be tempted to handle the problem yourself. This approach generally provides an outcome only slightly more favorable than ignoring the problem. In keeping with this, it is also a bad idea to try to call up the IRS and explain the problem in hopes that it will go away. IRS agents are trained as investigators and to collect evidence to be used in criminal proceedings. These agents may appear helpful, but remember, in the context of any criminal investigation, any statement that an individual may make can be used against them in a court of law. However, if you have a qualified attorney, you won't have to worry about this problem.

Keep in mind that when we talk of having representation in a tax proceeding, we are not talking about an accountant, not even a Certified Public Accountant. Accountants can provide tax advice, prepare tax returns and other services, but they cannot provide legal advice unless they are licensed attorneys. However, as some tax attorneys may also be accountants, simply because someone is an accountant does not automatically disqualify them from helping you. Remember, first and foremost, you are hiring an attorney.

When looking for a tax attorney, there are several key points to keep in mind. First, call around to get recommendations. Contact other attorneys or friends to ask for recommendations. Ask other businessmen or anyone you may know who has had tax problems. You can also contact your state or local bar association and ask for certified tax attorneys in the area. In many states, the practice of tax law is recognized as a specialty meaning that to receive the distinction of being a tax specialist; an individual must have completed a certification process. Target these professionals. As well, though with a certification such will likely be the case; consider only those legal professionals that have completed additional formal education in taxation beyond law school. With rare exception, attorneys, prior to being licensed to practice law; complete a formal course of study that leads to a Juris Doctorate degree (or J.D. as it is commonly known). There are several additional specialty degrees that lawyers sometimes pursue and one of these focuses on tax law. Look for a legal professional that has completed this course of study. Typically, this individual will have the letters LL.M, or the notation, LL.M in Taxation after their name in addition to the J.D. designation. This LL.M. in Taxation denotes the additional training in tax law. You also want to make sure that the legal professional that you retain is licensed to practice before the correct courts. The individual should be licensed to practice before the U.S. Tax Court and the appropriate Federal District and Appellate Courts. You will want to also interview several of these different professionals to get a feel for the individual and how you interact with them. Remember, the penalties can be harsh, so having a good fit in a tax attorney is crucial. As with any attorney, be careful of any legal professional that promises to make all of you problems go away after an initial meeting. For a legal professional to correctly do their job, some time will be required. You want an attorney who can provide you with a best case and worst case scenario. This individual should also be able to give you some overview of what would be involved in either case as well as the reality that will likely fall somewhere in the middle. Finally, it is always a good idea to hire an attorney that has been practicing for a number of years as experience is priceless.

This also leads to another question - How do you know when you need a tax attorney? The easy answer is whenever you are contacted by any taxing authority. In this area, it is better to be safe than sorry. Particularly when it is the IRS calling. If you are contacted in person by the IRS, say noting and immediately contact a legal professional in the manner set out above. If contacted by mail, you can handle things a bit differently. Say there is a clarification requested or a portion of your tax return was overlooked. While you can't go wrong contacting a tax professional, limited information can generally be provided particularly if it is clear that you made an error or overlooked something on a return. However, if the mailed request asks to set up a meeting, notifies you of an audit or in any fashion requests a personal appearance - particularly a court date - immediately consult a tax attorney. There are also other situations that could arise where the need for a legal tax professional is clear. Some of these situations are - IRS audits, Innocent Spouse tax claims, payroll tax problems, failure to file income tax returns, seizures, wage garnishments, unpaid taxes, liens or levies. (These are just a few of the events that could require a tax attorney and this list is in no way meant to be exhaustive.) It would be unwise to attempt to handle any of these matters on your own. It would also be equally unwise to delay addressing these problems as there are set and specific timelines that must be adhered to in order to preserve you rights. So as soon as you become aware of a tax problem, keep any documents you have and immediately contact a legal tax professional before you do anything else - particularly before talking to anyone related to the IRS or other taxing authority.

While tax attorneys spend a great deal of their time dealing with the IRS, it is also common for tax attorneys to practice in other areas that allow for the use of their tax expertise. Having a basic understanding of some of these additional practice areas can be useful if you should ever have the need for such services.

One other areas that tax attorneys can provide assistance is in dealing with business and business transaction issues. For instance, say an individual has worked in the corporate environment for a number of years and decides to leave the corporate world to open a consulting business. Prior to beginning work in this new business, certain legal work will have to be completed. To address potential liability issues, the new entrepreneur will want to create a new business entity. This may be a new corporation, a sub-Chapter S business, a LLC, LLP or perhaps a Professional Association. Each of these entities provides different levels of corporate liability protection, alternatives for management and membership structure and, perhaps most importantly, different options on the taxing of earnings and income. It is also possible to form and have operating agreements between the members or owners of the different entities setting out each parties' duties and rights in regard to the entity. Many tax attorneys can assist in providing an understanding of these different entities and in giving the new businessman options and guidance on what will best suit his needs and be the most financially feasible. Tax attorneys can also provide long term planning, strategy and tax guidance that will serve to allow a new business entity to be the most profitable in light of the current tax laws.

In addition to helping with the formation and planning regarding business entities, tax attorneys can also assist in a more personal service - estate planning. When a person dies, their estate has to be administered in keeping with the laws of the state where the person died or owned property. An estate may also be subjected to what can sometimes be a substantial tax. Tax attorneys can explain a variety of estate planning mechanisms that can allow an individual, well prior to their death, to formulate a method of distributing their assets in a fashion that will allow them to pass their assets on to those that they determine rather than having a potentially large portion of the estate going to taxes that could have otherwise been avoided.

Remember that tax attorneys spend a great deal of their time dealing with the IRS. However, there is a great deal more that a tax attorney can do. Chances are if you are dealing with any issue that potentially could result in some form of tax being charged, you could benefit from a consultation with a tax attorney.

This article is not offered as, nor is it to be construed, as legal advice, nor does it create any relationship, attorney/client or other, between the author and the reader. To obtain any legal advice, consult an attorney licensed to practice law in your state.