Is Hiring a Tax Lawyer Worth the Cost?

tax lawyer

Hiring A Tax Lawyer

People get audited by the IRS every day, and somehow that doesn’t make the notice any less terrifying.

Something about getting investigated by a department of the US Government can really send shivers down a person’s spine.

Relax! It’s okay.

We all make mistakes. But if you think your tax mistake could cost you thousands of dollars or even hit you with criminal charges, it’s time to call a tax lawyer.

A tax lawyer can help your business in a legal emergency or keep you from getting audited before it happens. The problem is… how much is this going to cost you?

Keep reading to learn how tax attorneys decide their fees, and whether hiring one is worth the cost.

Before we begin, let’s get one thing straight…

Tax Lawyer vs CPA (Tax Preparer)

tax lawyer

Business lawyer working about legal legislation in courtroom to help their customer

Both have deep knowledge when it comes to tax law, but tax attorneys and certified public accountants are completely different.

CPAs have an advanced business degree and extensive work experience under their belt. They’re required to pass a CPA exam and pay for 120 hours of continued education each year. CPAs are the most advanced of tax preparers out there—compared to someone working a few months a year at H&R Block, for example.

Tax lawyers, or tax attorneys, have to finish law school and pass the bar exam. They won’t help you file your taxes or do your accounting. They can, however, help you settle legal disputes with the IRS.

Hire a CPA if you want a longterm relationship with a qualified tax accountant. A CPA knows how to protect a large income and investments. They navigate tax filings complicated by divorce, owning your own business, or owning multiple properties.

But if you’re in legal hot water with the US Government, you need to hire a tax lawyer. They’re the only tax professional who can give you client confidentiality. A CPA or other tax preparer can be made to testify against you in court.

The Big Question: What Problem Do You Hope Your Tax Lawyer Will Solve?

The cost of hiring a tax attorney depends on your legal problem. You should hire a tax lawyer if:

  • you’re being audited and don’t think you can represent your self well, or you need to appeal an unfavorable tax audit.
  • you need help with a complicated business negotiation.
  • you don’t understand your most recent IRS notice (or CP).
  • you’re filing for bankruptcy.
  • you’re facing criminal charges related to taxes.

Say, for example, you get an official notice from the IRS.

It’s loaded with obnoxious tax jargon, and you can’t tell if the information they’re presenting is even correct. You have no idea who you’re supposed to respond to or what your rights are in this interaction.

This visit to a tax lawyer probably won’t take long. You’ll be charged a flat fee for as much time in the office as you need, and they’ll follow up with you later by email to make sure it’s resolved.

Hiring a tax lawyer when someone’s facing jail time for tax evasion is a different story. You’ll want to consult with them often before, during, and after your trial. You’ll be asking much more of them in terms of research and representation. They’ll charge by the hour, and may ask for a percentage of a settlement.

In fact, let’s take a minute to talk about how and why tax lawyers choose their payment options…

Hourly vs Flat Rate

Tax attorneys will almost always charge by the hour.

How much they charge per hour will be different depending on the lawyer and their years of experience. It’s common to pay anywhere from $200-400 per hour. Some lawyers charge upwards of $1000 per hour if they’re at the top of their field in a competitive city.

A lawyer may offer you a flat fee if what your asking for is simple and routine. This is a one time fee you pay regardless of how long it takes for them to resolve your problem.

You can ask to pay a flat fee for other services, but in all likelihood, the lawyer will insist on their hourly rate for most jobs. And they should! Tax lawyers are well trained legal professionals who can save you and your business in times of need.

So what does all of this mean for you?

How much can you expect to pay in total? Let’s take a look:

What To Expect

From start to finish, here’s what you can expect to pay a tax lawyer who charges the average $200 per hour…

First consultation - estimated $100-$500 for their time, whether you hire them or not. Some lawyers offer this for free.

Flat fee for small service - entirely up to the lawyer’s discretion depending on how difficult/time consuming they believe your task to be.

Minor settlement with IRS - estimated $700-$1500 on average.

Complex negotiation with IRS - estimated $2,000 to $6,000 depending on how the case develops.

Lengthy court battle - upwards of $5,000 to $15,000, not including additional fees for inconvenience and materials.

DIY As Much As You Can First

Come to your first meeting with a tax attorney fully prepared. You don’t want to waste your money paying for hours of time you could have saved by doing some of the grunt work yourself.

Most people are able to represent themselves during a tax audit. But if you owe more than $10,000 in back taxes, call a lawyer.

There are some issues a tax preparer or CPA can help you with. You should stop talking to them and start talking to an attorney if you feel you’re being taken advantage of by the IRS or another business. Attorneys are skilled at protecting your rights in terms of complex tax laws.

You don’t have to face your tax issues alone.

We’re Here to Help

It’s hard to know exactly how much you’ll pay when you hire a tax lawyer. It depends on what your issue is, where you live, and which lawyer you talk to.

Luckily, there are skilled lawyers near you ready to help.

Contact us today for a consultation. See you soon!

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