Tax Attorney: What to Look For and Why Do You Need One?

Tax Attorney

Tax attorneys can provide critical help to you when you need it the most. However, most people associate the term “attorney” with serious crimes and high level court cases. However, the term  “tax attorney” simply points to the fact that you aren’t just dealing with numbers, you are also going up against the law. It’s true that tax attorneys can handle things that accountants can’t. However, you don’t necessarily have to be embroiled in an ugly court case before taking the help of a tax attorney. In fact, both accountants and attorneys can do a lot to help you deal with past problematic events and help you come up with a properly plotted course in the future. Let’s find out more about tax attorneys and how they can be useful for you.

Tax Attorney: All You Need to Know

Who is a tax attorney?

As per article published by A tax attorney is a lawyer who specializes in the field of tax law. A tax attorney is great for managing all technical and legal issues associated with your tax situation. While you can avail an attorney’s services after having a problem, you can also consult one in advance to keep problems from rising in the first place.

What are the requirements for becoming a tax attorney?

Tax attorneys need to have a Juris Doctor degree. It is also referred to as a “J.D.” Tax attorneys must also be members of the state bar for practising. However, these are just the minimum requirements. An advanced training in tax law is also important for tax attorneys. Most tax attorneys also tend to possess a master of laws degree in taxation, referred to as an “LL.M.”

Some tax attorneys also have accounting backgrounds. However, they might not have extensive experience when it comes to filling out tax returns. Their expertise is focused on the legal implications of tax situations. In case you are encountering a complicated accounting problem which has some legal issues as well, seek out an attorney who’s also a certified public accountant (CPA) or enrolled agent (EA) so you can cover both bases. However, a tax attorney who is an accomplished accountant is probably going to charge you quite steeply.

When do you need a tax attorney?

If You Have Legal Issues

In case you are planning to sue the IRS/being investigated by the IRS/seeking an independent review of your case before the U.S. Tax Court, you’ll need to avail the services of a knowledgeable, experienced lawyer. You’ll need someone who knows the machinations of a courtroom well. Some non-attorneys can also represent clients in court. However, you will be better off if a tax attorney is representing you in court. In case you’ve committed a tax fraud, go and get yourself an attorney. Even knowingly claiming deductions or credits to which you weren’t actually entitled is considered as tax fraud.

Your relationship with your attorney and anything you say to or confide in them is typically privileged. As per the general attorney-client privilege, tax attorneys aren’t obligated to divulge any private information to the court. This isn’t applicable to accountants in every case.

If You Have a Taxable Estate

The Internal Revenue Service (IRS) regulates a lot of things and all of them aren’t necessarily related to personal tax returns. Estates need to file returns with the IRS as well.

Your estate is taxable in tax year 2020 if its total value crosses $11.58 million. In the 2021 tax year, this amount was pushed up to $11.7 million. That high exclusion amount usually means that most people will not need to worry about estate tax planning. However, their heirs might have to shell out a staggering 40% of the balance over the applicable threshold if the estate does exceed these levels.

The Tax Cuts and Jobs Act (TCJA) doubled the estate tax exemption in 2018. However, like many aspects of the TCJA that apply to personal taxes, the estate tax will most likely go back to its pre-TCJA status after tax year 2025. A tax attorney is also extremely helpful for people to come up with strategies for estate planning that will help estate owners stay under the exemption threshold and reduce their tax liability.

If You’re Starting a Business

Before you can start a business, you will need to answer a lot of complex and convoluted legal questions. A lot of those questions have tax implications. Some of the questions that you might encounter are “What type of business entity should you set up?”, “Do you want to incorporate it?”, “Can you function as a sole proprietor?”

Regardless of the kind of business setup, you will always have some kind of tax ramifications. Tax attorneys can help you understand the structure and tax treatment of your company, including quite  a few non tax issues that might have slipped your mind.

If you engage in international business, your contracts, tax treatments and various other legal  matters will be even more complicated. In such a scenario, it is not recommended to move forward without a tax attorney.

What should you ask a tax attorney?

Before you hire a tax attorney, you must thoroughly vet and question the attorney in question. Here are some of the questions that can be asked::

  • Are they admitted to the state bar?
  • What area of tax law do they specialize in?
  • How much does the attorney charge?
  • If the attorney can’t personally help you or it doesn’t seem like a good fit, do they know of another tax attorney who might be more familiar with your type of problem?

What are some more cost effective alternatives to a tax attorney?

Most low income taxpayers will not be able to afford a high charging tax attorney. However, they can take advantage of the tax clinics that provide free or low-cost legal assistance. These clinics are funded in part by grants from the Taxpayer Advocate Service, which is an independent organization within the IRS. People working at the tax clinics are not employed by the IRS/Federal Government. However, these volunteers can help you with taxes and other similar issues. If you are looking for a list of low income tax clinics in your state, you can find it on the Taxpayer Advocate Service website, along with the languages served at each clinic. While there are income limits, the exact income ceiling is fully dependent on your family’s size. As per the rules in 2020, a single person qualifies for free assistance with resolving any tax disputes as long as he/she earns $31,900 or less every year.

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