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Powell Tax Law Blog

3 min read

Top Reasons Why You Should Hire a Tax Attorney

Facing an audit or tax problems from the Internal Revenue Service (IRS) might seem like a “rich man’s problem” at first glance but past research has shown that a person is more likely to get audited if they make $20,000 a year than if they make $400,000.

Experienced tax attorneys know that you do not need a Rolex and low handicap to find yourself in the crosshairs of the IRS, which can often feel overwhelming when facing tax liens, tax levies, back taxes, and other resolved matters.

Stephen J. Dunn, adjunct lecturer in the University of Michigan-Dearborn College of Business, says there may be countless ways you can end up with a high tax bill, but there are only a few ways to resolve the issue with a tax attorney, the gold standard for tax cases.

“A taxpayer should always be represented by an attorney if the case involves potential criminal offense, such as tax evasion, filing a willfully false tax return, or failure to file a tax return that is due,” writes Dunn.

Hiring a Tax Attorney vs. a CPA vs. an EA

Some people might ask, if I have a CPA already, do I really need to hire a tax attorney?

Certified Public Accountants or CPAs, along with Enrolled Agents or EAs, can also represent people in IRS matters.

EAs are trained to represent people before the IRS but are not certified as accountants or lawyers. CPAs are trained in the financial implications of tax laws.

“EAs and CPAs have one big limitation – they are ill-equipped for litigation,” writes Dunn.

Tax Attorneys: Equipped to Defend You with the IRS

Tax attorneys have expertise in tax law which allows them to advise clients on tax issues, represent them before the IRS, and practice in tax court should legal proceedings be necessary.

“Certified Public Accountants (CPA) and tax attorneys are both professionals who can attend to your tax needs. The primary difference between the two is that, while a CPA holds expertise in dealing with financial implications of tax matters, a tax attorney specializes in handling the legal aspects of taxation,” says WallStreetMojo.

A good rule of thumb: When facing a legal battle with the IRS, or facing the prospect of legal proceedings, hire a tax attorney.

“With an exhaustive knowledge of federal tax laws, a tax attorney is better equipped to defend you in tax disputes with the IRS,” explains WallStreetMojo.

When to Pick up the Phone and Call a Tax Attorney …

There are many reasons and issues that might prompt you to pick up the phone and call a tax attorney. Here are some of the problems clients come to Powell Tax Law to resolve:

  • Back Taxes: It can be a sinking feeling to owe back taxes, especially if you owe for several years. A tax lawyer can help you realistically assess your situation and help you work out a payment plan if necessary. A tax attorney can also help you apply for a waiver of penalties if the situation warrants.
  • Wage Garnishment: There is nothing worse than to get your paycheck and see a big chunk of your hard-earned income going to the IRS who has garnished your wages because of a tax issue. A tax attorney can examine your situation and see if there are options to get the garnishment lifted. A tax attorney can also help protect your other assets, such as bank and savings accounts, which the IRS can also seize.
  • IRS Audit: Last year out of 160 million individual income tax returns that were filed, the IRS audited 659,003 or just 4 out of every 1,000 returns filed. Most of these audits are correspondence audits, which shouldn’t be confusing, and often require the intervention of a tax professional to resolve. 100,000 cases are in-person audits, and in these cases hiring a seasoned tax attorney with experience in in-person audits makes sense.
  • Amended Tax Returns: A tax attorney can help you amend a personal (1040), corporate/business (1120), and employment (941/940) tax return while understanding the time limits, procedures, and process for successfully completing an amended tax return.
  • File a Claim in Federal Court: Taxpayers often end up fighting their case in U.S. Tax Court or Federal District Court and tax attorneys are licensed to represent you and practice before these legal proceedings.
  • File Tax Returns to Replace Substitute for Returns (SFR) Created by the IRS: Most people do not realize that the IRS can file a return for you, called an SRF or Substitute for Return, if they feel like you did not file a tax return you were supposed to. A tax attorney can help you file your own tax return in the matter which will often lower the taxes that the IRS claims you owe.
  • Innocent Spouse Relief: A wife or husband can be relieved of responsibility for paying tax, interest, and penalties if your spouse (or former spouse) improperly reported items or omitted items on your tax return. A tax attorney understands the laws and rules regarding this situation and can help file a claim.
  • Installment Agreement: A tax lawyer can help you negotiate an installment agreement with the IRS that is fair and reasonable.
  • Non-Collection Status: A tax attorney can help you claim non-collection status by demonstrating that paying the IRS would constitute an “economic hardship.”
  • Offer in Compromise (Fresh Start Program): The Fresh Start Program allows taxpayers to settle a tax debt with the IRS, usually for less than the full amount owed. Only about 10 percent of Offers in Compromise filed are accepted by the IRS, so an experienced tax attorney is needed to navigate.
  • Penalty Abatement: Individual taxpayers and business owners can qualify for penalty abatement if they have a good excuse or reason as to why they were unable to comply with IRS rules. A tax attorney can help you properly argue your plea for a penalty abatement.

Contact Powell Tax Law in The Woodlands or San Antonio today for a free and confidential consultation that can be the first step to providing you with an experienced legal team to represent you in issues small and large with the IRS.