Who is a Tax Lawyer/Attorney?
An attorney who focuses on taxes is referred to as a tax attorney, also known as a tax lawyer.
Tax lawyer frequently engages in tax-related analysis, client advice regarding the tax ramifications of particular transactions, and tax litigation involving disputed tax positions.
Tax attorneys can help both individuals and corporations with tax-related legal difficulties. Like many other accounting professions, they need a solid grasp of tax, accounting, and financial law.
A tax attorney’s main responsibility is to assist taxpayers and businesses in fulfilling their legal tax obligations, such as filing tax returns, while maximizing any available credits or deductions to reduce those obligations. They advise clients to comprehend their choices and navigate complex tax laws.
What Does a Tax Attorney Do?
Tax lawyers assist their clients in navigating the intricate federal, state, and local tax laws. When necessary, they represent their client’s interests before tax authorities too. The following are typical duties for tax attorneys:
1. Legal Research: To comprehend tax law and policy, tax attorneys must do the appropriate legal research. Since laws are continually updated, tax attorneys should be able to locate and use the most recent versions of the law.
2. Addressing Tax Disputes: Tax lawyers assist clients in handling tax-related disputes. They could bargain with the IRS on behalf of their customers.
3. Defending Clients in Court: When necessary, a tax lawyer will represent or counsel clients.
4. Represent the client’s interests in negotiations with the IRS: A tax attorney can assist in defending your rights. Due to their extensive knowledge of tax law, tax attorneys are well-equipped to serve as a go-between for their clients and the IRS.
5. Counseling Clients on Legal Issues: Tax-related issues like retirement, mortgages, and income are frequently the focus of client inquiries and other legal matters.
Tax Attorney Career Overview
A lucrative career option is tax law. However, tax law is extremely technical and difficult to comprehend. It necessitates a tendency toward analysis. It’s also necessary to know related disciplines like auditing and accounting. Over time, you keep improving at interpreting tax law.
The bottom line of enterprises is directly affected by tax-related advice. To consider a tax’s financial effects on a company’s profitability and liquidity, one must have business sense and commercial knowledge.
No one carries out tax law. Most options are available for subfields in tax law. They specialize in a particular area of tax law, such as transfer pricing, customs, trade tariffs, and direct and indirect taxes.
The problem, however, is that most law schools do not introduce students to the variety of professional choices that tax law offers.
Most tax attorneys have a bachelor’s degree in business, finance, or accounting when starting employment. Individuals take the Certified Public Accountant (CPA) certification exam to become licensed accountants.
After earning a bachelor’s degree and obtaining a CPA license, the next step is to enroll and start law school. Although it is possible to practice law directly out of law school, most tax lawyers start their careers working for other lawyers or under any law firm to get experience in the field before going it alone.
Difference Between a Tax Lawyer and an Accountant:
A Certified Public Accountant (CPA) is a five-year degree professional specializing in taxes. CPAs have a broad range of skills and are adaptable financial planners.
In addition to auditing and bookkeeping, they also manage annual financial records, prepare taxes, and plan estates. CPAs can guide you on tax issues, real estate, investments, and company strategy.
They frequently examine and audit a company’s financial records to identify areas that could be improved. CPAs assist customers with more difficult tax problems, such as running a small business, making high-value investments, or paying off debt.
Although CPAs can represent clients in IRS disputes, tax attorneys have more courtroom training and expertise. Despite completing law school and successfully passing the bar exam to become lawyers, tax attorneys are also informed and adaptable about tax-related matters. They emphasized tax-related litigation, tax liabilities, and representation in such proceedings.
They typically have stronger negotiating abilities, more legal knowledge, and more case law experience. Any information disclosed to tax attorneys is private because they must respect the attorney-client privilege.
When is Hiring a Tax Attorney Worthwhile?
Employing a tax attorney may be especially appropriate in several circumstances.
1. Estate Planning-Establish trusts, transfer assets to family members and use other measures to reduce estate taxes with the assistance of a tax attorney who can also handle the paperwork.
2. Starting a business-A tax lawyer may be able to offer advice on developing tax-wise business plans for launching, purchasing, selling, or growing a company.
3. Tax disputes- A tax attorney can assist you if you need to file a lawsuit against the IRS, a state or municipal tax body, or if you wish to appear before the Tax Court.
4. Tax reduction-A tax lawyer might be able to assist you in pursuing options like the following if you have an unpaid debt with the IRS or another tax office that you wish to negotiate or contest:
- In-Compromise Offer
- Relief for innocent spouse
- Tax bills can be paid in instalments.
What to Look for in a Tax Attorney?
1. A law license – An attorney must hold a license to practise law. You can check on the website of your state’s bar association to see if a tax attorney is authorized to practise law in your state.
2. Indices of a more specialized or higher education- In most states, obtaining a law license also requires completion of law school. A master’s degree in taxation may be held by some tax attorneys (called an LL.M.).
Some tax lawyers are also certified public accountants, as evidenced by their possession of CPA licences.
3. The IRS requires a Preparer Tax Identification Number (PTIN) for anyone who prepares tax returns for pay. Your tax return’s preparer must sign it and give you a PTIN.
Benefits of Having a Tax Attorney for a Firm
1. Tax Code Expert:
The current Internal Revenue Service tax code is almost 1700 pages long. To help you with your tax problems, tax lawyers have the knowledge of the code and the time to examine and apply the rules lawfully and ethically.
State and federal tax laws are always changing. If you choose to handle your tax problems alone, you risk misinterpreting current tax legislation or basing your case’s outcome on old facts. However, if you hire a tax attorney, they will use their understanding of those regulations to address any issues you have with the IRS.
2. Recognizing Your Tax Obligations.
A tax attorney can inform you of the tax implications and issues related to the taxation of various business entities and the effects of taxes on business owners if you are beginning a business.
Additionally, if your company plans to hire staff, a tax attorney can help you comprehend your obligations regarding tax withholding, tax return filing, and federal tax deposits.
3. Engage in Negotiation-
A phone call or written correspondence with the IRS can be nerve-wracking. As a result, you risk giving the agent handling your case incorrect information or answers to queries.
Your tax attorney can handle all correspondence—letters, telephone, and other forms of communication—with the service on your behalf.
They will be aware of the pertinent information to provide and guarantee the accuracy of your data. You can let your lawyer handle communications with the IRS instead of accidentally providing false information and implicating yourself.
4. Help in Starting a New Business-
More stress than you might imagine might accompany starting a new company. So, choosing between a partnership, a sole proprietorship, a C-corporation, and an S-corporation is necessary to set up the firm properly.
Obtaining an Employer Identification Number, managing all paperwork, opening business accounts, and other tasks are also required. Even if you rebrand an already-existing company you purchased, this procedure can still be challenging.
With their extensive company planning experience, tax attorneys can help you with every step of the planning procedure.
5. Drafting Necessary Documents-
If you’re thinking about giving or transferring property to family members or other individuals, a tax attorney can assist with the necessary paperwork and provide tax law advice.
The benefits of gifting within an estate plan are frequently discussed with clients by a tax attorney, who will also implement these gifting methods into the estate planning forms.
6. Income and Property Protection-
Tax attorneys know how to protect your income and property. Even though the IRS may utilize your income or place a lien on your property to satisfy your tax debts, a tax attorney can assist you in safeguarding your finances by carrying out the following actions:
- establishing a payment plan with the IRS,
- submitting a request for an offer in compromise, paying off your tax bill,
- Requesting that your tax debt be marked as “Currently Not Collectible,”
- Set up a plan to pay off your tax obligation with a credit card or other payment option.
7. Protection Against Threats and Abuse-
Most IRS officers are highly professional and kind when dealing with average taxpayers. They typically won’t scare you or lie to you to get you to pay what you owe.
However, if you choose to address your tax problems alone, you run the chance of running into a rogue IRS agent who may bully or mistreat you in meetings. However, having a tax attorney at your disposal protects you from such dangers.
Additionally, your tax attorney will defend your rights throughout your ongoing tax case and act as your advocate in meetings.
8. During an IRS Tax Audit-
IRS tax audits can be stressful, regardless of whether you must let the IRS visit your business or send in your financial records for them to review. The assistance of a tax attorney might make things simpler.
The IRS will be contacted on your behalf by a tax attorney, who will also ensure you have all the records the IRS requires and assist you in submitting them for examination. Your tax lawyer can act as a liaison for you when the IRS requests additional information or has inquiries. Additionally, having legal representation is always beneficial if the IRS determines that you owe them back taxes.
Tax obligations are problematic, but if you hire a tax attorney with the required expertise and understanding, you can handle them or perhaps avoid them. Employ a qualified tax attorney immediately to shield you, your possessions, and your income from the IRS.