When Do You Need a Tax Attorney?

What to Look for in a Tax Attorney

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There are accountants and there are attorneys. Both are there to help you in your hour of need, but the term "attorney" has a more ominous ring to it because it implies that you're not just fighting numbers –  you're fighting the law.

To some extent, this is accurate. Tax attorneys can handle certain things that accountants can't, although you don't necessarily have to be in the fight of your life before an attorney's services – rather than an accountant's – can come in handy.

Tax attorneys are lawyers who specialize in the complex and technical field of tax law. They're best for handling complex, technical and legal issues associated with your tax situation. A tax attorney can step in after you have a problem, but consulting with one in advance can also help you avoid problems. 

When Would You Need a Tax Attorney? 

The Internal Revenue Service has its fingers in a lot of pies and not all of them pertain to individual tax returns. Estates must file returns and businesses must do so, too. You might need the help of a tax attorney when handling any of these types of situations: 

  • You anticipate having a taxable estate when you die. As of 2017, this means that you expect the total value of your estate will exceed $5.49 million, or $10.98 million if you're married, although this threshold tends to go up annually. Your heirs would have to pay an estate tax of up to 40 percent of the balance over these amounts as of 2017. A tax lawyer can help you devise estate-planning strategies to help you stay below the exemption threshold and avoid a huge portion of your estate going to taxes. 
  • You're starting a business. What type of business entity should you set up? Do you want to incorporate? Can you function as a sole proprietor? Any business setup you choose will have tax ramifications. Legal counsel can advise you about the structure and tax treatment of your company, including some non-tax issues you might not otherwise have considered. 
  • You engage in international business and you need help with contracts, tax treatment and other legal matters.
  • You plan to bring a suit against the IRS, you're under criminal investigation by the IRS, or you want to seek independent review of your case before the U.S. Tax Court. In these cases, you'll want someone who is familiar with a courtroom. Although certain non-attorneys can represent clients in court, you might be best off with someone who is well versed in the law. This is especially true if you've committed tax fraud, such as claiming deductions or credits you weren't actually entitled to. Your relationship with your attorney and anything you say to him or confide in him is typically privileged. This means he's under no legal obligation or duty to divulge it to the court. This is not always true of accountants. 

What You Should Look For

Tax attorneys must have a Juris Doctor degree, commonly referred to as a J.D. They must be admitted to the state bar. But these are just the minimum requirements for practicing any type of law. Additionally, tax attorneys should have advanced training in tax law. Most will have a master of laws (LL.M.) degree in taxation, referred to as an LL.M.

Some tax attorneys also have backgrounds in accounting, although they don't involve themselves with preparing tax returns for the most part. Their expertise is more focused on the legal implications of tax situations, not saving you as many tax dollars as possible. Nonetheless, if you're facing a complex accounting as well as a legal matter, you might want to look for an attorney who is also a certified public accountant so you can cover both bases. They're rare, and they're often expensive, but they're out there. 

Questions to Ask

Here are a few things you might want to make sure of when you initially meet with a prospective tax attorney:

  • Is he admitted to the state bar?
  • What does he specialize in?
  • How much does the attorney charge?
  • If he can't personally help you, can he refer you to another tax attorney who may be more familiar with your type of problem?

    Free and Low Cost Legal Assistance

    Tax clinics provide free or low-cost legal assistance to low-income taxpayers throughout the U.S. Tax clinics are funded in part by grants from the National Taxpayer Advocate. You can find a complete list of low income tax clinics on the Taxpayer Advocate's Web site.