A tax attorney is a lawyer or law professional who specializes in the complex field of tax law. Most tax attorneys have received a bachelor’s degree in law and many also studied accounting, a field closely related to tax law. In law school, tax attorneys learn to understand the Tax Code, the federal government document that details how individuals and businesses must pay taxes. The Tax Code is thousands of pages long and fully understanding it takes years of studying and practical application.
To become a tax attorney, a person must pass what’s called the bar exam, a notoriously challenging exam that determines whether or not a person is qualified to practice law. Fewer than half of all those who take the bar exam pass on their first attempt. All tax lawyers in the United States must pass their state bar exam before being legally able to practice.
In addition to the years of studying it takes to pass the bar exam, most tax attorneys have gone through rigorous internships at law firms or other legal businesses that give them an understanding of how to put their expertise on tax law into practice. Understanding how to use tax law to a client’s advantage is just as important as fully understanding the tax code, as this is what gives tax attorneys the ability to swiftly and expertly resolve complex tax issues.
We’ve covered what gives a tax attorney their qualifications— but what can a tax attorney do for you?
Essentially, a tax attorney can resolve any tax issues you may have with the Internal Revenue Service or your state’s government. Whether you have legal issues as an individual taxpayer or as a business owner, a tax attorney can provide tax services that will help you resolve them and pay the IRS the lowest possible amount allowed by law. A tax lawyer can also provide you with legal advice and financial planning services to help you avoid any future tax issues.
Some common reasons people hire tax attorneys include:
A tax attorney is both a legal expert and a skilled negotiator. Whatever tax issue you may have, tax attorneys are there to represent you and advocate for you in a way you couldn’t do on your own.
When people think of tax attorneys, they may think they only work at law firms and are only needed for those who are facing criminal charges. While a tax attorney is certainly essential for defending yourself against criminal tax charges, they are also essential for tax relief services.
Tax relief services can help you if you owe back taxes, whether you just found out you owe them or you’re facing aggressive IRS collection actions. Let’s take a look at some tax services a tax attorney can provide.
If you owe the IRS an amount that you can’t pay in full immediately, you have the option of applying for an installment agreement. Installment agreements are a contract with the IRS in which you agree to pay your tax balance in regular monthly installments.
While you can apply for an installment agreement on your own through the IRS website, a tax attorney can help you negotiate the terms of an installment agreement with the IRS. A tax attorney can analyze your tax information and financial situation and negotiable with the IRS to get you an installment agreement that will put the least amount of financial strain on your daily life. There are also several different types of installment agreements and a tax attorney can help you decide which would be best for your financial situation.
Guaranteed installment agreements are the easiest type of installment agreement to obtain. However, this type of installment agreement is only available to those who owe the IRS $10,000 or less. In addition to owning $10,000 or less, to be qualified for a guaranteed installment agreement you must have filed and paid your taxes on time for the last five years, have filed all your tax returns, agree to pay in a timely manner in future years, and agree to allow the IRS to take any refunds you may be given while your installment agreement is in place.
If you qualify for a guaranteed installment agreement, know that your installment agreement cannot last for more than 36 months. And the minimum amount you must pay each month is your tax liability amount divided by 36. You can seek to enter a guaranteed installment agreement by filling out an IRS form, calling the IRS customer service phone number on their website, or by using the services of a tax lawyer or other qualified tax professional.
A major benefit of a guaranteed installment agreement is that, as long as you pay according to the agreement, the IRS will not take aggressive tax collection actions like tax levies or tax liens against you.
Streamlined installment agreements are an option for those who owe as much as $50,000 in back taxes to the IRS. With streamlined installment agreements, you don’t always have to fully disclose a full, detailed record of your finances to the IRS.
With streamlined installment agreements, taxpayers have longer to pay than they would with a guaranteed installment agreement. Instead of 36 months, they’ll have up to 72 months to pay their full tax balance.
Partial payment installment agreements are more challenging to obtain than guaranteed and streamlined installment agreements. Partial payment installment agreements are available only to those who cannot realistically pay off their full tax debt to the IRS. If you apply for a partial payment installment agreement and the IRS approves it, they will create a monthly payment amount that they determine you can afford.
While partial payment installment agreements are more challenging to obtain, they can be hugely beneficial if you qualify. To prove to the IRS that paying all your tax debt would put you in extreme financial hardship, you’ll need to provide them with detailed financial records.
An offer in compromise is available only to those who would be put under extreme financial hardship if they had to pay their full tax debt. To prove this to the IRS, you must present them with a highly detailed record of your finances. If you are approved, however, you’ll be able to pay a much smaller amount of tax to the IRS than you originally owed.
An offer in compromise is difficult to get. As of 2018, the acceptance rate for offer in compromise applications is only 40.32%. However, if you believe you qualify, you can improve your chances of approval by hiring a tax attorney to present your request to the IRS in the best possible light.
Getting a notice of an IRS audit is always stressful. But if you receive a notice that says you’re being audited, you can protect yourself by hiring a tax attorney to provide audit representation.
Audit representation, also known as audit defense, is a tax relief service. If you’re being audited, a tax attorney can stand in on your behalf during the IRS audit process. A tax attorney can also help you develop a strategy to defend yourself during an audit.
Tax liens (claims on your properties) and tax levies (seizure of your properties) are late-stage actions taken by the IRS. Before experiencing a tax lien or levy, a taxpayer will have ignored or failed to resolve many notices from the IRS about unpaid tax balances. Liens and levies can be placed on a number of different kinds of property, including bank accounts, wages, and physical properties like boats or houses.
In the case of liens, the IRS will publicly state that they have a claim against your property. This can make it extremely challenging to sell assets and can cause people to regard you as a credit risk, as liens are public knowledge. In the case of levies, the IRS will begin to seize your assets. Two common types of levies are bank account levies, which allows the IRS to seize or freeze funds in your bank accounts, and wage garnishment, which allows the IRS to take money directly from your paychecks.
If you get a notice of a tax lien or tax levy, or if you’re already experiencing a tax lien or tax levy, a tax attorney can help you get resolution. A tax attorney can help you make a deal with the IRS to resolve your tax balance and get your lien or levy removed. Tax help from a qualified tax professional can help you resolve these stressful tax issues quickly.
When you file your taxes each year, you must file both your federal taxes and your state taxes. If you’re late in paying either the federal government or the state government, these government agencies can take action against you. If you’re late in paying your state’s government, you may find that, unfortunately, many states are often even faster and more aggressive than the IRS in their efforts to seek payment. Additionally, some states, including California and Rhode Island, even post lists of delinquent taxpayers online for public viewing, which can add to the stress of owing back taxes.
If you have a state tax matter issue, a tax lawyer can help you resolve it. While Tax Defense Partners is located in Los Angeles, California, our tax attorneys, certified public accountants, and tax preparers are experienced in providing state tax dispute resolution services in every state, from California to New York. Our tax experts also provide local income tax dispute resolution for those residing in Washington D.C.