When Lawyers Need a Lawyer... Taxes Edition

Closeup of a check to IRS for All My Money.
By William Vogeler, Esq. on May 23, 2019 8:59 AM

There are three good reasons for a lawyer to hire a tax attorney, but you only need one.

Tax law is a specialty, just like probate, family, and immigration law. If you want to try it, do it after you are certified and can bill for your time. Otherwise, you'll want to keep all the money you can for taxes.

Here are the second and third reasons:

Time

Learning about tax law and your obligations is time-consuming. A tax lawyer already knows the what, when, where, why, and how of tax law. The who is you.

You should know that time is not really money in law practice; timekeeping is. A tax adviser can help you set up a system to keep track of time, deductions, expenses, costs, etc. That's where the money is when it comes to preparing for the tax bite.

"Tax obligations and record keeping are not things that you should attempt to learn on the job," according to FindLaw's attorney writers. That's good advice for any business owner. For lawyers, tax obligations may also follow litigation and appeals. A tax attorney will focus on issues related to that liability. More than a few law firms have learned those tax lessons the hard way. It's not enough to be a trial lawyer; you have to be a tax lawyer.

Liability

Successful trial lawyers set up an aviation company to split the cost of keeping two planes. Engstrom, a plaintiff's firm in Los Angeles, tried to write off "standby" expenses. A U.S. Tax Court found that Engstrom owed $1.12 million for improper travel expense deductions on more than 100 flights. The U.S. Ninth Circuit Court of Appeals, in an unpublished opinion, said the tax court was correct. The appeals court ruled that, despite claiming an agreement concerning a 24-hour standby airplane, "Engstrom produced no written record of such an agreement and the offered testimony did not clearly establish the alleged agreement's existence."

So the liability was about record-keeping, time, and money. In case you missed it, scroll up for three good reasons to hire a tax lawyer.

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