Reasons to Hire a Tax Attorney
What can it mean if my name comes up before this powerful agency? Do I need a tax lawyer? When you have IRS tax problems, it is very important to handle that very carefully. IRS tax matters are a very crucial and sensitive issue and a slight mistake in the process can cost you very dearly in the form of loss of money, time, which can get you frustrated and may land you in jail. The tax laws and the legalities involved in the process of tax settlement of your IRS taxes can be very complex and you may not understand it at all.
There would be many questions pounding your mind at this stage such as:
1. Should I hire an IRS tax relief attorney if I am facing an IRS audit?
2. Is hiring an attorney expensive?
3. When should I hire a tax attorney to represent me in my IRS tax debt dispute?
4. Can I Really Settle my Tax Debt with the IRS for Pennies on the Dollar?
5. Should I lawyer up against the IRS or not? …………and many more…………..
Suggested Read: What are Tax(definition) and its types?
In this article, you will get all your questions answered.
When you want to save yourself and your business from IRS penalties, interest and possibly criminal actions (including jail terms), it is best to hire an expert in tax representation, who will be able to handle your situation better. The tax lawyer, CPA or the IRS licensed enrolled agent understands everything about the tax laws and they know what to do in different situations. They have the expertise to devise a specific plan of action for your case and follow it for implementation. Tax representatives are trained, licensed and experienced to handle the technicalities involved in the tax resolution and settlement process.
Most taxpayers feel a chill about dealing with the IRS. It’s likely worse today than a few months back. Acting Commissioner Danny Werfel’s report outlines actions to fix problems at the IRS. But many will continue to wonder.
Reason One – Exemption from testifying
If you are in trouble with the IRS only an IRS tax attorney can give you the attorney-client privilege. Why is the attorney-client privilege important for tax law cases? Easy – your attorney is exempt from testifying against you. That’s right, should your tax liability case go to trial, and you have chosen to work with a CPA or tax preparer for help, your CPA could actually be made to testify against you!
Reason Two – Able to Make the Right Decisions
Only a Tax lawyer will have experience in achieving tax settlements. While a CPA may be familiar with some tax settlement programs, they will not have a full understanding of the ins and outs of the various programs. Tax laws and codes are complex and many times change yearly. In addition, there are many programs available a troubled taxpayer can use to settle or reduce the amount of tax liability owed but only an experienced tax attorney will know how to qualify you and to determine both the best program to use. Being under the collections process from the IRS is a dangerous time and the wrong advice can be very costly. Do not take any chances with your financial future, hire an IRS tax attorney and get IRS Tax Relief.
When should I hire a tax attorney?
Needing to hire a tax attorney probably means you are in some hot water with the IRS for one reason or another. The tax attorney you choose can either correct the problem or make it a million times worse. This is why certain questions need to be asked before you hire the attorney. You want to make sure you have someone knowledgeable, truthful and working for you, and not against, on your side. Find the tax attorney who is going to cool that hot water for you.
There are deadlines where issues must be resolved to avoid further penalties and the poor lines of communication with the IRS do not help in the resolution of your issues. If the IRS ignores your attempts to correct the mistakes, it is time to contact an attorney. An attorney can draft your letters to the IRS in a more direct way that is guaranteed to get the IRS’s attention. Additionally, most tax attorneys have direct contact information for the necessary branches of the IRS where matters should be handled and can negotiate matters over the phone instead of through writing, effectively ending the communication issues.
IRS Tax Disputes
Most tax disputes arise in the form of an audit of one or several past tax returns. If the IRS notifies you of an audit, you should hire a tax attorney immediately.
Your tax relief attorney can communicate with the IRS on your behalf, be present during your audit and help negotiate a settlement, if necessary. Having experienced legal counsel helps ensure that you don’t overpay as a result of your audit.
In some instances, taxpayers ignore letters and warnings from the IRS because they’re scared or don’t know how to respond. In those cases, the IRS may have no choice but to threaten you with criminal charges for tax evasion. If you learn that you’re the target of an IRS criminal investigation, you’ll want to hire a tax lawyer—and do it quickly.
Your tax lawyer can reassure the IRS that you’re taking its investigation seriously, work with the IRS in an effort to help you avoid criminal charges and represent you in court if you are charged with a tax crime.
Suggested Read: What is a Back Tax? and How to Negotiate Back Taxes With IRS?
Offer in Compromise
An offer in compromise –“OIC”–is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS will accept your OIC only if you convince it that:
- you aren’t able to pay the full amount in a reasonable time, either as a lump sum or over time through a payment agreement
- there is doubt as to the amount of your tax liability (unusual), or
- due to exceptional circumstances, payment in full would cause an “economic hardship” or be “unfair” or “inequitable”– for example, you can’t work due to health problems, or you’d be left with no money to pay your basic living expenses if you sold your assets to pay your tax bill in full.
If you are unable to pay your federal tax debt, the IRS offers a way to get a new start called an Offer in Compromise. The Streamline IRS Offer in Compromise program is straightforward with specific criteria and open lines of communication. This program is very manageable for any taxpayer to handle themselves. However, those who do not qualify for the Streamline Offer in Compromise program should consider hiring a tax attorney to handle their IRS negotiations. The IRS has up to two years to accept or reject an Offer in Compromise and the higher your total amount owed, the less likely the IRS is to accept your settlement offer. To begin the OIC process, you must file IRS Form 656, Offer in Compromise and pay a $150 nonrefundable application fee. For full details on the OIC program, see the
IRS Form 656 Booklet, available at www.irs.gov.
Tax evasion and tax fraud are criminal offenses that the IRS charges citizens with when they refuse to file tax returns, pay taxes, or reveal all of their sources of income. These criminal charges bring with them fines, interest on the tax owed, prosecution fees, incarceration, and public humiliation. Your name, city, state, and crime are all published on the IRS website. If you have been negotiating with the IRS and two agents come to your office or home to ask further questions, it is time to hire an attorney. Remember that once a formal investigation is opened with the IRS, any information you give them could be self-incriminating. Do not attempt to handle these serious charges without an attorney who can protect your rights and frame your arguments in the most favorable way.
Know that lawyers are bound by strict confidentiality rules. Even if you end up hiring a different attorney, the lawyers you meet with cannot share the information they learned with the IRS or anyone else.
Some questions to consider :
- How Long the Firm Has Been In Business?
If you know how long a firm or tax attorney has been in business, then you know how much experience they have. You want an attorney that is seasoned in their profession and that is used to dealing with the IRS.
- Does the Attorney Make You Feel Like You are at a Used Car Lot?
If your attorney uses the sale pitch technique to gain your trust and reverence, then you need to run out the door. Any attorney who needs to sell themselves with gimmicks and flashy talk is overcompensating for their lack of success.
- Does the Tax Attorney or Law Firm Want All of Your Money Up Front?
If you answered that with a big fat yes, then you need to run from this law firm. A good attorney would never request all of your money upfront. A retainer yes, but not all of the money. When you pay an attorney everything at once, this doesn’t serve as an incentive to go that extra mile for you.
Meeting a Lawyer: Things to Consider When Hiring an Attorney
What Questions Should I Ask Before Hiring a Tax Attorney? :
- How long have you been practicing law?
- Do you just practice tax law, or do you also work in other areas of practice?
- Have you previously handled tax situations similar to mine?
- What’s your assessment of my situation? What works for me and against me?
- If I hired you, what course of action would you recommend?
- Do you charge a flat fee or hourly rate, or do you use some other billing structure?
- Can you estimate my total legal fees?
Now, that you have finalized your tax attorney, you should have an overview of the process which IRS follows. A tax lawyer can help in getting the IRS to accept an offer in compromise.
To make this determination, the IRS looks at your income and assets to determine your “reasonable collection potential.” You must provide detailed information about your financial situation on IRS Form 433-A, Collection Information Statement. This includes verifiable information about your cash, investments, available credit, assets, income, and credit card debt consolidation. In addition to the property, the RCP also includes your anticipated future income, fewer amounts allowed for basic living expenses.
The amount of your offer must be equal to the “realizable value” of your assets plus the amount of money the IRS could take from your future income. For example, if your assets are worth $20,000 and the amount of your future income that’s available to the IRS is $10,000, your minimum offer must be $30,000.