What to Consider When Hiring a Tax Lawyer
Tax laws can be daunting to the average person, especially since the stakes can be high. While you can handle some tax issues on your own, professional guidance can make the process flow more smoothly. A taxpayer might retain an enrolled agent or a certified public accountant to assist with general questions and routine tax preparation, but there is no substitute for a lawyer when a complex situation or a major problem arises. They will have received specialized training in the nuances of tax laws and can devise strategies with more sophistication than a non-legal professional. If you feel uncomfortable communicating with the IRS, you can file a special power of attorney form that allows an attorney to handle these communications for you.
Most taxpayers want to take advantage of any benefits or loopholes that may be available, but nobody wants IRS investigators knocking on their door. Violations of tax laws can result in severe penalties, sometimes including prison time if violations were willful. If you are being investigated by the IRS, or suspect an investigation on the horizon, you should consult a lawyer immediately. You also should consider seeking legal representation if you have delinquent tax returns or substantial back taxes that you cannot pay. Ignoring the problem will not make it go away.
Deciding who is the right lawyer for you can be challenging. A basic Google search can be a good place to start, but this should be only a first step. Google searches will lead to a wide range of results, including many paid listings that do not necessarily reflect the skill of a lawyer or their aptitude for your case. Similarly, you might gain useful insights from talking to friends or family members who have hired a tax attorney, but the right fit for them may not be the right fit for you. Each situation is unique. Here are certain guidelines that can help you knowledgeably research and compare attorneys.
Background and Experience
You should hire a lawyer who has substantial experience assisting people in situations similar to yours. For example, if you cannot pay your tax debt, you may want to hire an attorney who knows how to negotiate an offer in compromise, allowing you to settle the debt for less than the full amount owed. If you want to challenge an adverse decision by a tax authority, you may want to retain a lawyer who has handled appeals in tax court. If the IRS has brought criminal charges against you, you should hire a lawyer who has handled many tax fraud cases and who is experienced in federal court. If you are winding down a business or developing an estate plan, you may want to consult an attorney who is familiar with the intersections between tax and business or estate planning law. Some attorneys may have relevant board certifications or memberships in professional organizations. They may have received awards or other formal recognition of their legal prowess.
In general, you should aim to hire an attorney without a history of serious disciplinary issues. Information about an attorney’s professional record can be found by searching for them on the state bar website for their jurisdiction. You may want to review the details of any disciplinary action to get a sense of the events leading to it. Some violations are less significant than others. You may not want to automatically remove an attorney from your consideration based on a very minor infraction if they are currently in good standing.
On the other hand, a record of serious violations should be a red flag, even if the attorney has achieved some good results. You do not want egregious mistakes by your attorney to prevent you from obtaining advantages, benefits, or relief for which you otherwise would be eligible.
Reviews and Testimonials
Reviews by previous clients can give you a sense of what it would be like to work with an attorney. You may find insights into their personality, level of professionalism, and communication skills. Client reviews can be helpful even if the details of your case are different from a previous client’s case. However, beware of very brief reviews that are harshly negative or effusively positive without providing details. These reviews may not be trustworthy.
If an attorney has received favorable reviews from other attorneys, they likely have a strong reputation in the legal community. When a dispute arises, they may be more likely to be respected by judges, investigators, and government attorneys, which can help resolve your matter more favorably and efficiently.
Often, a tax lawyer will discuss their most notable successes on their website or blog. Each matter is decided on its own facts, so you should not assume that you will receive the same outcome as a previous client. However, a history of positive results for people in roughly similar situations to yours can be a promising sign. You may also gain insight into the matters in which an attorney performs most impressively if many of their strongest results involve the same type of issue.
Many tax lawyers offer a free consultation to prospective clients, while others provide a consultation for a reasonable fee. The consultation helps the client and the attorney decide whether they are the right fit for each other. Even if you are impressed by an attorney’s credentials and achievements, you should not choose them on that basis alone. Instead, you should make sure to work with a lawyer whom you can trust and who relates well to you. You should feel that your lawyer is personally invested in your situation, rather than treating you as just another case number. Ideally, you should set up consultations with several attorneys before deciding whom to hire.
Bringing a list of questions to the consultation can help you decide whether an attorney is the right fit. For example, you may want to describe your goals and ask how likely you are to attain them, based on what the attorney sees as the strengths and weaknesses of your position. You should not expect a precise answer, but a general impression can help set your expectations. An optimistic answer may be encouraging, but you should think twice if an attorney makes guarantees or seems much more confident than their competitors. They may be overpromising. Also, you should listen to how the attorney explains their evaluation. They should be able to articulate their reasoning in a way that is coherent and accessible to a non-lawyer.
Fees are another important issue to address at the consultation. Some tax lawyers charge an hourly rate, while others charge a flat fee for certain types of services. Many taxpayers prefer a flat fee because it offers predictability, while an hourly rate may add up to a significant expense if a case requires more time and effort than expected. On the other hand, a flat fee may result in overpaying a lawyer if the case resolves more efficiently. Fees vary depending on the complexity of the matter. For example, an attorney likely will charge more for representing you in an IRS appeal or a US Tax Court dispute than for pursuing an installment agreement or a penalty abatement. Any fee arrangement should be clearly set out in the representation agreement so that you understand your obligations.
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