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5 Things a Tax Lawyer Can Do (That You Probably Can't)

Concept image for filing federal income taxes online and being audited. Computer keyboard, calculator and pen are placed on income tax form 1040. The 'word' AUDIT is stamped on the form 1040.
By Christopher Coble, Esq. on February 10, 2015 2:54 PM

What can a tax lawyer do for you, that you may not be able to do on your own? If you are thinking about hiring a tax law attorney, this article can help you understand how a tax lawyer can help you and weigh the benefits against the costs of hiring one.

What Does a Tax Lawyer Do?

Online tax-filing products make filing taxes seem pretty straight-forward to many Americans. What many of us fail to realize, however, is just how complex the tax code can be. In some cases, it may take an expert to make sure you get a big refund check in the mail and not an audit notice from the IRS. (Or to make sure it's just an audit notice and not a criminal summons.)

But "what type of work does a tax lawyer actually do?" you may be asking. Here are five things that a tax lawyer can potentially help you with:

1. Respond to IRS Audit and Collection Notices.

If the federal government comes calling, you'll probably want some help, especially if you owe the IRS money. Dealing with notices, interviews, and the myriad tools the IRS has at its disposal to collect taxes can be a daunting task. While it is possible that the IRS made a mistake in determining how much you owe, it may take a trained professional to discover the error and advocate on your behalf.

2. Try to Keep You Out of Jail.

There can be serious penalties for not filing a tax return or paying in an accurate and timely manner. While you can't go to jail for not paying your taxes, you can be imprisoned for trying to cheat on your taxes. If you're being accused of tax fraud or some other tax-related crime, a tax lawyer can work to keep you on the right side of the line or help differentiate between an honest mistake and a dishonest filing.

3. Navigate Confusing IRS Documents.

There are nearly 2,000 IRS forms and publications, many of which can be incomprehensible to a layperson. From listing your rights as a taxpayer, to listing arcane deductions like dental expenses and weight loss programs, to listing the ways the IRS can collect on tax debts, it may take an expert tax attorney to understand it all and guide you through the IRS' complicated tax procedures.

4. Help You Set Up, Buy, or Sell Your Business Correctly

Starting a business has many tax consequences, and the type of business you form determines how you and your business will be taxed. A tax lawyer can help you understand the tax consequences of different business structures, especially if you have partners or investors.

Of course, buying or selling a business also comes with tax consequences that a tax lawyer can help you understand. A tax lawyer can also help you maximize tax benefits (while following complex rules) if you are forming a non-profit.

5. Advise You on How to Lower Your Taxes in the Future.

Figuring out this year's tax filing is all well and good. But what if you're already worried about your potential tax hit next year? There are several methods to lowering your future tax liability, and a tax lawyer can help you figure out which ones are best for you.

Tax lawyers can also advise you on strategies you can use to limit estate and gift tax as part of your estate plan.

What Are the Duties of a Tax Lawyer?

As you may be able to figure out from the five items listed above, a tax lawyer's primary duties are to understand the tax code and how it applies to their clients, whether those clients are individuals or businesses.

Tax lawyers advocate on behalf of tax-payer clients who may need help avoiding trouble with the IRS or just figuring out how to pay the lowest amount of taxes that the law allows.

While this may sound simple enough, we have tax laws at the federal, state, and municipal levels, and each level has a plethora of events that are both taxed and exempt from taxation, which results in an extremely complex area of law.

How Much Does It Cost to Work With a Tax Lawyer?

Tax lawyers typically charge by the hour, and the rate will vary depending on where you live and how much experience the lawyer has. The average rate charged by tax lawyers in 2020 is $200-$400 per hour.

In some cases, tax lawyers will charge a flat fee for their services, if what you need done is straightforward and agreed-upon at the outset of service.

Free and low-cost tax clinics are available throughout the country. You can find more information on the Taxpayer Advocate Service website.

Is Hiring a Tax Lawyer Worth It?

Whether it makes financial sense to hire a tax lawyer depends on the situation you are facing. If you are facing a legal issue such as a criminal charge like tax fraud or you are planning to sue the IRS, then you will want an attorney's help.

Additionally, if you are dealing with a complex personal or business tax issue, there is a lot of money on the line, or you want to make sure to get a tax issue right the first time, then it will likely be worth it to hire a tax lawyer.

On the other hand, if you just need help filing taxes or you have general questions about filing taxes, you may want to consult with a reputable tax preparer or accountant who charges less per hour than a lawyer would.

If you are low income, you may be able to find free or low-cost help through the Taxpayer Advocate Service website.

Questions You Should Ask A Tax Lawyer

If you contact a tax lawyer, here are some questions you should ask:

  • How long have you been practicing law?
  • What do you charge per hour? Do you offer this service at a flat fee?
  • What percentage of your time is devoted to tax law?
  • Do you have a background in accounting?
  • Do you have a particular emphasis on a certain area within tax law?
  • Is this issue one that warrants a lawyer's help?

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