Tax issues can be extremely costly, with outstanding tax debt and building interest and penalties. In many cases, the last thing you want to think about is spending more money to hire someone to assist you, but some situations warrant working with a professional.
A tax attorney can help you understand tax laws, your options for tax debt resolution, and how to negotiate with the IRS. So, even though hiring outside help may be an additional cost, in the end, it can save you money by helping you avoid further tax penalties and even legal charges.
What situations are worth hiring a tax attorney? When can you handle the problem yourself? This post covers it all.
Do You Need Legal Help? Evaluating Your Circumstances
Whether or not to hire a tax attorney will depend on various factors. It’s not always the best option for every tax issue. Here are a few points to consider as you start making a decision:
- The amount of your tax debt: How much do you currently owe, including penalties and interest? Is your balance small and manageable or very large?
- The complexity of your issue: How complicated is your tax issue? Do you understand the tax laws behind it, or do you need guidance?
- Risks associated with your debt: How long has it been since you have communicated with the IRS? What stage is the agency at in its collections process?
Some tax problems are relatively minor and easy to resolve. It all depends on how long your issue has been going on, how much you owe, and whether or not you understand your rights and IRS requirements.
Examples of When to Hire a Tax Attorney
A range of tax issues can lead to working with a tax attorney. But here are some of the situations when hiring an attorney may be a wise choice:
A Large Tax Balance You Can’t Afford
If you have a large tax bill, getting on top of it is more challenging. You may feel overwhelmed looking at your balance and continue to do nothing, watching penalties and interest build. But the sooner you act, the better. Talking to a tax attorney is the first step in pursuing the right option and resolving your debt.
A Dispute with the IRS or State Tax Agency
The IRS isn’t always correct. If you disagree with taxes assessed by the IRS or your state, you may be trying to file an appeal or take another action against the agency. A tax attorney will first ensure there is a discrepancy and will then handle the dispute process.
Tax Evasion or Fraud Charges
Have you been charged with a tax crime, such as tax evasion or fraud? Don’t try to handle these matters on your own. There are serious consequences that come with IRS allegations. A tax attorney will fight for your best interests and ensure your rights are being upheld. They will also advise you through negotiations and court proceedings.
IRS and State Audits
The IRS audits taxpayers in several situations, including if there is a discrepancy in the income reported, there are too many deductions being claimed, your income is very high, or other reasons. If you get a notice of an IRS audit or examination, talk to a tax attorney about your options and how to proceed. You may also want to contact a tax attorney if you’re facing a New Jersey tax or residency audit. Both types of audits can be costly to fail, and you need the help of an experienced tax professional.
Businesses with Complex Tax Situations
Business taxes are notoriously stressful and complicated. But the risks of not complying include hefty penalties, asset seizures, and reputational damage. Business owners with especially complicated tax obligations should work with an attorney to learn more about the legal implications and how to protect the business.
Liens and Levies
The IRS will start trying to collect what you owe as soon as you miss a deadline. Actions the IRS may take if you continue to fail to pay include filing a tax lien or issuing a levy on your property. You never want your property to be at risk. Talking with an attorney as soon as possible can help you avoid this from happening.
Needing a Complex Debt Resolution Option
Applying for a payment plan can be fairly straightforward on your own, but if you’re dealing with a financial issue or are unable to pay your balance even in monthly installments, an attorney can help you understand your options and negotiate with the IRS. Examples include:
- An offer in compromise, which is an agreement by the IRS to accept a lower amount than what you owe based on your financial circumstances.
- Partial payment installment agreements (PPIAs), which allow you to pay what you can for a set period of time and eventually settle for less.
- Currently not collectible status, which is a temporary pause on collections due to financial hardship.
It’s not always easy to review your eligibility and proceed with the request process effectively, which is where a tax attorney can step in.
Can You Handle Tax Issues on Your Own?
Taxpayers have the right to deal with the IRS themselves to resolve their issues. Some situations don’t always warrant a tax attorney. Examples are as follows:
- You owe a smaller amount of taxes, such as a few thousand dollars.
- You qualify for a simple payment plan and can comfortably afford the payments.
- You understand how to file your taxes and resolve any outstanding balance.
- You received a notice about a penalty or missed deadline but understand how to make your payment or request penalty abatement.
- You’re dealing with any other basic tax problem that can be handled with minimal effort.
In addition to these situations, a tax attorney may not be the best move if it won’t provide significant financial benefits — i.e., if your debt is small and it’s fairly easy to pay it off. If you already understand what to do, you may not need legal advice, and so you don’t always need to pay that extra cost.
Other Tax Experts to Consider
Tax attorneys have considerable knowledge and expertise in tax law. This can be valuable when you have a serious issue and just want to take the right steps for fast resolution.
However, you may also be able to work with other types of tax professionals, including Certified Public Accountants (CPAs) and Enrolled Agents (EAs), who provide similar services to attorneys and have a high level of tax expertise. They can also have specialized knowledge about certain industries and business types.
The IRS also has a lot of resources and instructions for taxpayers to figure things out for themselves. This is especially helpful if your matter has low stakes and is easy to resolve without understanding all the ins and outs of tax law. If that’s the case, DIY may be the best option to help you save money.
For example, anytime the IRS sends out a notice, there are usually detailed instructions listed in the document to follow to resolve the issue or contact the IRS. You can simply follow those directions. The IRS also provides thorough information on tax forms, which you can download directly from the IRS website.
Other Factors That Play a Role in Whether to Hire an Attorney
You may have a unique situation that doesn’t easily fit into a black-and-white decision-making process. Consider hiring an attorney when you:
- Don’t have time or simply prefer not to deal with the IRS
- Are looking for peace of mind that everything is done correctly
- Are dealing with high-stakes tax issues that could be extremely costly if dealt with poorly
- Want to understand more about tax laws that impact your situation
- Are more concerned with getting the right outcome than the cost of hiring an attorney
If these situations describe yours, working with a tax attorney may be the right choice just so you can rest assured that your matter is being handled by an expert. Not everyone wants to communicate with the IRS, even if the matter is minor.
How to Find the Right Tax Attorney for Your Situation
Remember: Hiring a tax attorney isn’t always necessary, but their guidance can be critical in some situations. It all depends on whether you feel it’s worth the cost in your situation.
A great place to start when you’re unsure is to have a consultation with an attorney. Most firms provide free consultations, so you can get a sense of how serious your issue is, how the attorney would help you, and what it would cost. Then, you can weigh the benefits with the financial impact.
If you do work with an attorney, always choose a professional who will be transparent with you. Watch out for language that guarantees you any sort of positive outcome, such as “settle your debt for less” or “get approved for IRS Fresh Start.” The truth is that attorneys cannot promise you anything before they review and understand your situation.
You also need to work with someone who can personalize their services to your needs. Every tax issue is a little bit different, so be sure you maximize your investment with an attorney who will tailor their approach to help you reach your desired outcome.
Why Paladini Law?
No matter what tax issue you’re dealing with, an attorney can provide expert guidance, ensure compliance, protect your financial interest, and give you peace of mind. For complex, high-risk tax issues, it’s best to work with a professional who will have your best interests in mind. This way, you can get out of debt and resolve your problems with the IRS the right way — and as quickly as possible.
Paladini Law is committed to personalized tax services that deliver the best outcome possible for your situation. We help with setting up installment agreements, offers in compromise, dealing with tax audits, and much more.
Get in touch with Paladini Law today when you’re ready to get started with a trusted, transparent tax attorney who will fight for your rights.
