How Do You Know When You Need a Tax Attorney?

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The IRS initiated 3,019 investigations into tax-related cases in 2017. These cases touched on identity theft, tax evasion, estate, and individual taxes.

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Woman filling US 1040 tax form 2018 year

While tax issues can be straightforward for some, taxes are often a difficult subject for many taxpayers. It’s necessary for most people to hire a tax attorney to help them avoid trouble with the law.

If you’re wondering whether your situation calls for tax counsel, here are some signs to help you determine when you need to consult a tax professional.

When You Owe Back Taxes

When an individual owes back taxes (local government, state, or federal), you can either remedy the situation yourself or hire a tax attorney.  Bringing on board a professional who is well versed in the law and who has relationships in the legal and legislative fraternity will yield superior results.

A tax attorney can help you structure a payment plan with the IRS, allowing you to pay the outstanding debt in installments.  Alternatively, they can help you get an offer in compromise agreement. Under this plan, you can settle your outstanding tax for less than the total amount you owe the IRS.

To get an offer in compromise agreement, you will need to convince the IRS that you are unable to pay your liability either as a lump sum or in installments.  You will also need to convince them that there is genuine doubt over the amount that you owe.

Lastly, to get an offer in compromise, the IRS will need to see that paying the tax liability in full would lead to your economic hardship.  For example, if you are sick and unable to work to pay it off or if full payment will leave you with no money for basic living expenses.

A Tax Attorney Will Help You Communicate with the IRS

At times when the Internal Revenue Service (IRS) gets in touch with you, you need a representative.  If for example, the IRS sends you a CP notice you might be at a loss on the next steps to take in response to them.

A CP notice is a letter that the IRS sends to notify you of an outstanding balance. Hiring a tax attorney when a CP notice comes in will help you avoid it ballooning into a bigger problem.

In other instances, there may be extenuating personal factors that might lead to your not being able to engage directly with the IRS.  You may be sick for example. At such times signing a power of attorney indicates that your chosen tax counsel is speaking on your behalf.

Sometimes the IRS decides to pursue criminal charges against a person or entity. The most common reason for such a move is usually tax fraud and tax evasion.  In such instances, it is critical that you begin contacting the IRS via a tax counsel. You do not want to end up with hefty fines or even jail time because you did not seek proper representation.

A tax attorney will help frame your points most favorably and also look out for your rights.

When You Start Planning an Estate

When you want to start planning with the money you want to leave to your family, consulting a tax lawyer is crucial.

There are certain thresholds beyond which an estate will have to pay taxes. As of 2018, a married couple’s estate crossing the $22.8 million mark will attract an estate tax of up to 40%.

If you are not married, the threshold for your planned estate is $11.4 million. It will also attract up to 40% in taxes.

When you consult a tax attorney before planning your estate they can be especially beneficial in helping you reduce the potential tax bill.  An experienced tax attorney will advise you on strategies you can use to stay below the exemption limit.  You will end up avoiding having a significant portion of your planned estate going towards paying the taxes. Just be sure to verify your counsel’s track record before hiring them.

When You Want to Start a Business

Anytime you plan to start a business, an attorney is one of the two professionals you need to consult.

A tax counsel can guide you from their years of experience on the potential tax scenarios for various entities. While you can also consult a business attorney for this, they aren’t exposed to it as deeply.  For example, if you were to register an S-corp, it’s not the business itself that will be paying taxes.  You will end up reporting the income on your tax return. If you were to opt for a C-corp, however, it’s the business itself that would be paying the tax.

Should you settle on an LLC, your tax counsel would let you know that it has limited liability. That offers you protection from personal liability in case someone decides to sue the LLC.  These kinds of nuances and what they mean for you are the province of a tax counsel. When you engage them during the starting of a new business, you get more productive and thorough advice.

When you want to form a business abroad, knowing the tax implications is mission-critical to decision making.  Consulting a tax counsel versed in international tax law will help you grasp the various statutes and regulations involved.

When You Are Buying or Selling a Business

When a business is changing hands, a tax counsel should be part of the professionals guiding the process. The interplay of different motivations has the potential to cause trouble without proper mediation.

When you are selling a business, you want to maximize your capital gains as much as possible. In case you are the buying party, your motive will be to recover the buying price quickly through depreciation.

Consulting someone specialized in tax law can help make the difference between a successful transaction or a failed one.

Get the Right Tax Help

There are times when you could face challenges in handling your tax-related matters. Hiring a tax attorney will help you gain experienced hands to help you resolve them and stay out of trouble.

If you are in a legal quandary with respect to your taxes, Tax Attorney Near Me has the answers. Contact us to find the solution to your tax problem today!

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