When to hire a tax attorney

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When you’re faced with tax issues outside your knowledge or experience, a little extra help goes a long way. Hiring a tax attorney can be the best way to handle your complex tax issues.

When should you hire a tax attorney?

Filing a regular tax return doesn’t usually require the services of an attorney. However, the following cases may call for legal advice:

  • Trust and estate planning: Whether you are transferring property, assets, setting up an estate plan or creating a trust, a tax attorney can help you compile the paperwork and, wherever possible, reduce taxes.
  • Settling tax disputes: If you have a tax dispute with the IRS, it’s better to seek the help of a tax attorney rather than going at it alone. An attorney can advise you on the right course of action and solve the dispute accordingly.
  • Getting tax relief: Need to resolve back taxes? A tax attorney can help you find the best solution to settle your debt with the IRS.
  • Starting a business: There are numerous tax issues involved when starting and running your own enterprise. A tax attorney can help you maximize your strategies to minimize your tax bill and get through audits.
  • Investing in real estate: A tax attorney can help when you are looking to or already have invested in real estate properties, especially when there will be multiple owners and multiple properties.

What are the roles and responsibilities of a tax attorney?

Tax attorneys help clients understand complicated tax laws, settle disputes with the IRS, provide tax relief, prepare tax-related documents and offer their expertise in broader areas such as corporate, estate or business taxes. Tax attorneys can be part of either legal or accounting firms, or work independently. While attorneys who work at accounting or consulting firms may work more with tax laws, those at legal firms may also appear in tax court to represent clients.

What to look for in a tax attorney

The quality of services offered by tax attorneys can vary considerably; finding a qualified and experienced attorney to help you solve your tax issues requires your own due diligence. Look for these four essential factors when hiring a tax attorney:

  • Law license: An attorney needs a law license to practice law in a state. You can find an attorney’s law license by visiting the website of your state’s bar association. A comprehensive list of state bar associations can be found on the American Bar Association website.
  • Preparer Tax Identification Number (PTIN): Because preparing federal tax returns is one of the responsibilities of a tax attorney, the IRS requires tax attorneys, Certified Public Accountants (CPAs), or anyone else who gets paid to prepare federal tax returns, to have a PTIN.
  • Qualifications and experience: A law degree is the education qualification for a tax attorney. To find a qualified tax attorney, consider looking for such qualities as specialization and extensive experience in taxation and a CPA license. Consider attorneys with specialized designations/credentials depending on what you are hiring the tax attorney for. For those who will help with estate planning and trusts, look for an LLM in estate planning, CTEP or AEP.
  • Client testimonials: To help you gauge the type and quality of a tax attorney’s services, take time to review the testimonials of clients, past and present.

How much does a tax attorney cost?

Attorneys can charge anywhere between $300 and $400 per hour, and the more experienced the lawyer, the higher the rate. How much you’ll be required to spend will also depend on the complexity of your case. Because attorneys charge by the hour, the cost can add up quickly the longer the case continues.

Some attorneys offer pro-bono services, or services that are free of charge. You may also have the option to work with a tax attorney on contingency, whereby the attorney receives a percentage of your financial reward. Free legal help from a tax attorney is available through a local low-income tax clinic. Visit the IRS to find a low-income tax clinic in your area and to determine if you qualify for such services.

Tax attorney vs. CPA

While both tax attorneys and CPAs work on various tax-related matters, there are differences between the two roles. A tax attorney, for example, is a lawyer who has gone to law school, passed the bar and is qualified to litigate on a range of legal matters outside taxation. A CPA, however, is an accounting professional who is qualified to manage bookkeeping, auditing, tax preparation and other financial duties. A tax attorney is hired typically for complex taxation issues whereas a CPA is hired for preparation of financial records and tax returns.

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Written by
Cynthia Widmayer
Insurance Contributor
Cynthia Widmayer has over two years of experience as a personal finance writer. She covers home, car and life insurance products for Bankrate, the Simple Dollar, and Coverage.com, among others.
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