The payment of taxes is an obligation that must be met by every employed citizen and business owner of the United States, and failure to do so can lead to serious consequences. In 2020, the Internal Revenue Service's Criminal Investigation Division initiated 1,598 tax crime investigations. Out of these, 945 were recommended for prosecution, and 593 resulted in the offender being convicted and sentenced. However, tax matters are usually complex and confusing matters. The IRS code alone has a page count that runs into thousands, more than any layman can read and properly understand. As such, hiring a tax attorney nearby to help you handle any tax-related matters that you have can go a long way in resolving the complex and technical issues that are usually associated with these types of matters.
With IRS audit rates witnessing a significant increase in recent years, it is always a good idea to have a tax attorney on hand to guide you through this confusing process. Tax attorneys not only help you prepare for an IRS audit, but they also perform several other tax-related services. Some of the situations that a tax attorney can help you with include:
- Filing petitions or lawsuits against the IRS
- Dealing with unfiled tax returns, tax liens, tax levies, and tax penalties
- Dealing with outstanding or unpaid taxes
- Criminal investigations by the IRS
- Starting, buying, or selling a business
- Leaving property or money to your children, relatives, and other heirs
Although it is always in your interest to hire a tax attorney near you whenever you have tax-related issues, it is also important to make sure that your attorney is duly qualified to help you deal with these issues. Therefore, it is necessary to ask the following questions:
Where Are You Licensed to Practice Tax Law in the State You Are?
Tax-related court cases are typically filed in federal courts, and so it is always a good idea to make sure that your tax attorney is sworn into the practice of the federal courts that hear these types of matters in your state of residence. These courts are the United States Tax Court, the United States District Courts, and the United States Court of Federal Claims. The United States Bankruptcy Court may also hear bankruptcy-related tax issues.
Tax attorneys can only practice in a federal court after successfully earning a bachelor's degree, passing the LSAT, and getting a law degree from an accredited law school. After getting this law degree, the attorney must pass a state-administered bar examination. The United States Tax Court, the United States Court of Federal Claims, and some United States District Courts like the Southern District Court of Texas accept attorneys that have been licensed by any state in the country. However, some United States District Courts only accept attorneys that have been licensed by the states where these courts are located. Examples of these types of courts include the Southern District Court of Ohio and the Northern District Court of California. Note that even though many tax-related cases are filed in federal courts, tax matters that involve a state or local government revenue agency are usually filed in state trial courts.
What Kind of Tax Work Do You Handle?
Even though tax law is generally considered a narrow branch of legal practice, it covers a wide range of areas and issues that require a great deal of specialized expertise. As such, before hiring a tax attorney near you, you should make sure that this attorney specializes in the type of tax matter that you need to take care of.
The different practice areas of tax law can be categorized into three broad groups, and these are:
- Tax Planning: tax attorneys that specialize in this type of tax work help clients put their affairs in order in ways that maximize the client's financial, business, and economic goals while also minimizing any taxes that this client has to pay to achieve these goals.
- Tax Compliance: this type of tax work involves helping clients determine the best ways to appropriately report their tax-related matters to relevant governmental bodies and authorities. This typically includes preparing and filing returns, preparing documents that support tax return positions, analyzing past events to make sure that they are properly reflected on returns, and any other activities that ensure timely tax reporting.
- Tax Controversy: tax attorneys that specialize in tax controversy typically handle civil and criminal tax litigation matters. These include tax disputes like audit and refund requests. Tax attorneys that handle tax controversy issues are usually consulted after the tax-related transactions in question have already occurred. However, they may also be consulted beforehand, especially if the tax matter is expected to be a contentious one. Note that even though tax controversy work generally involves litigation, not all cases progress to court, and many matters are resolved administratively at either the federal, state, or local level.
How Long Have You Been in Practice?
When it comes to tax-related issues, experience matters. Tax attorneys near you that have more years of practice in handling tax matters are generally better at solving these types of issues than tax attorneys that have fewer years of experience. However, your tax attorney should not only have years of practice in tax law but should also have years of experience in handling the particular type of tax matter that concerns you.
Always find out how long your tax attorney has practiced law. Many tax law firms display the number of years that they have spent in the legal profession on their websites. It is also a good idea to find out how much of this time has been spent handling tax matters that are similar to yours. Based on the American Bar Association's recommendations, you can do this by asking your tax attorney to provide you with a caseload breakdown that shows the types and volumes of cases this attorney has handled.
Do You Charge Fixed or Hourly Fees?
Always find out how you will be billed by your tax attorney. Tax attorneys generally charge hourly rates at an average of $200 - $400 per hour. However, some tax attorneys may charge you a flat fee regardless of the amount of time they spend working on your tax matter. The total cost of hiring a tax attorney near you usually depends on the type of tax matter that you need to solve, your geographic location, and your attorney's level of experience. As such, you can end up paying an hourly fee of up to $1,000 if you hire a highly experienced attorney that works for a large law firm located in a major city.
Discuss your billing options with your tax attorney. Hourly fees have the advantage of limiting your costs if you matter is a relatively simple one. However, you also run the risk of paying very high legal fees if your matter turns out to be more complex than you initially thought. Note that not all tax attorneys offer their clients the option of choosing a preferred billing method. It is also a good idea to find out your attorney's preferred method of payment. These typically include cash, checks, money orders, or digital payments.
Do You Charge for an Initial Consultation?
When scheduling your first appointment with a tax attorney near you, you should always ask if you will be charged for this meeting. Whether or not you will be charged for an initial consultation generally depends on your attorney, however, many tax attorneys typically offer free initial consultations. Note that some tax attorneys charge for initial consultations as a way to weed out individuals that use these consultations as an avenue to obtain free legal advice. This consultation fee can either be a percentage of the attorney's hourly rate or the full amount, depending on how long the consultation lasts.
How Do You Keep Clients Informed about Their Case?
Per the American Bar Association's rules of professional conduct, every attorney has to keep their clients reasonably informed of the status of their ongoing matters at all times and to also promptly respond to any reasonable requests for information from the client.
It is always a good idea to set up a communications plan with your tax attorney. Agree on when you will be given regular updates concerning your tax matter and how this information will be communicated to you. Many tax attorneys do this via daily, bi-weekly, weekly, or even monthly meetings. You can also decide on whether these meetings should be done in person or through audio-video conference calls. Note that this meeting schedule should not stop your attorney from informing you about any emergency updates on your case. You should also find out whether you will be able to contact your tax attorney directly if there is a tax-related emergency on your end, or whether your calls will have to go through personal secretaries, legal assistants, or paralegals.
Who Will Actually Do the Work?
Tax work typically involves a lot of paperwork and many tax attorneys near you would hire paralegals and legal assistants to assist them with this. The duties of these paralegals and legal assistants usually include drafting, reviewing, and editing documents, researching relevant federal, state, and local tax laws, analyzing any changes to these tax laws, and organizing tax documents collected from clients.
It is a good idea to find out how much of the work on your tax matter will be done by your attorney, and how much will be delegated to paralegals and assistants. Also, find out how this will affect your legal costs.
Note that paralegals and legal assistants are not licensed legal practitioners and so they are forbidden from setting legal fees, giving legal advice, or representing clients in court. Your tax attorney is responsible for supervising the activities of any paralegals or legal assistants that work on your case and can be held liable if they violate these rules, or commit any other acts of misconduct.
Can You Provide References from Former Clients?
Being offered references by a tax attorney bolsters your confidence in the attorney's skills. You should consider it a red flag if a tax attorney cannot provide you with a list of past clients that have had their tax matters satisfactorily resolved. Many tax attorneys display client reviews and testimonials on their websites. You can also independently get reviews of clients near you on your tax attorney online through websites like Google Review and Better Business Bureau. It is also advisable to contact the bar association of your state and find out whether there have been any complaints or disciplinary actions filed against your tax attorney.
What Is Your Success Rate?
It is always a good idea to find out the success rate of the tax attorney near you that you intend to hire. Success rates in tax matters usually refer to the attorney's ability to negotiate low settlements, stop or remove tax levies, garnishments, liens, and penalties, and successfully represent you in court if your case gets tried. Many tax attorneys display information like the number of offers in compromises they have settled and the number of tax cases they have successfully litigated on their websites. You can verify this information by contacting your attorney's past clients and finding out their thoughts on the attorney's negotiation and settlement skills.
Finally, some courts also provide interested parties with access to tax-related court records. You can request records of cases that involve your tax attorney from these courts to get an overall idea of the attorney's litigation performance. Note that the procedure for accessing court records is usually determined by the courthouse where they are located and the payment of a fee may be required before these records can be obtained.
When Should I Hire a Tax Attorney?
Even though it is possible to handle certain tax issues by yourself or hire a certified public accountant near you to do so, it is always in your best interest to hire a tax attorney. Tax attorneys are generally more knowledgeable than certified public accountants regarding tax laws and they are also more familiar with the various tax settlement options and programs that are available. Also, hiring a tax attorney provides you with attorney-client cover. This is important if your case should end up in court because it means that your tax attorney cannot be compelled to testify against you.
Therefore, you should seriously consider hiring a tax attorney if you find yourself under any of the following circumstances:
- You have a tax issue that you do not understand
- You receive an audit notice from the IRS
- You need to negotiate a settlement with the IRS
- You find out that the IRS is pursuing criminal charges against you
- You plan to file one against the IRS
- You are being investigated for tax evasion or tax fraud
- You need an independent review of your case before a tax court
- You want to appeal the decision of a tax court
- You want to leave money to your loved ones
- You want to take advantage of available tax credits
- You want to start or sell a business
What Are the Typical Qualifications Held by a Tax Attorney?
Tax attorneys are mandatorily required to complete seven years of education. The first four years are spent obtaining a bachelor's degree where they usually take courses related to accounting, business, or mathematics, as well as critical thinking and analysis, research, and communication. Note that this is not a compulsory requirement. After obtaining a bachelor's degree, the next three years are spent obtaining a law degree from a law school. After obtaining this law degree, tax attorneys must pass the bar examination of the state where they intend to set up their practice.