Tax Debt Attorney: When to Use IRS Tax Attorneys For Tax Relief
Tax laws are complex and for that reason there are many types of tax professions that have spawned off of the endlessly evolving tax code. Choosing the right type of tax professional for your particular tax situation is an important decision because it can help ensure you the best outcome and can save you money. A tax relief attorney or tax debt attorney provides certain benefits that other tax professionals may not. Below are some benefits of using a tax relief attorney, typical situations they can be utilized for, and tax solutions they can help with.
Benefits of a Tax Relief Attorney or Tax Debt Attorney
- Tax Attorney Client Privilege: The attorney-client privilege is a legal concept that is used between attorneys and their clients. This concept makes all communication kept strictly confidential. This concept is used because it encourages clients to disclose all relevant information to their attorney. If a client discloses all information to the attorney, the attorney can provide better advice and will likely be able to represent the client in a more effective manner. This is a privilege that is not offered between accountants and their clients. Many times, individuals that use tax strategies that may be pushing the tax law boundaries may choose to work with a tax attorney instead of another type of tax professional since they tax attorney would never be able to testify against them.
- Well Rounded Advice: A tax relief attorney will typically have the background and knowledge to offer a wider variety of solutions to a particular tax problem than other types of tax professionals. For example, a CPA or other type of tax professional cannot offer advice for filing for bankruptcy. A tax attorney will likely have a bigger arsenal of solutions than other types of tax professionals, which is a good thing when dealing with complex or technical tax problems.
- Representation: A tax attorney is one of the types of tax professionals that can act on your behalf and represent you before the IRS through power of attorney representation. With power of attorney representation, your tax relief attorney can represent you at meetings with the IRS, respond to IRS letters, and handle all other forms of IRS correspondence on your behalf. A tax attorney can also represent you before in tax court for tax issues. Being able to represent you in court is one benefit that other types of tax professionals do not offer.
- Tax Negotiation: Tax laws are complex. There is no standard formula to figure out what will be owed, which tax relief mechanism a taxpayer will qualify for or which penalties the IRS will make the taxpayer liable for. Many factors of the tax code can be negotiated. Tax attorneys generally have superior negotiation skills from their background and training than other types of tax professionals. They can also negotiate on your behalf in tax court, which other tax professions cannot do.
Situations and Problems a Tax Debt Attorney Can Help With
- Tax Court: If you are heading to tax court it is always smart to have an attorney on your side. A tax attorney will be able to represent you in court and will likely know the best approach for handling your situation.
- Tax Evasion: Serious tax offenses, such as tax evasion, can have some very serious consequences. Having a tax attorney on your side when dealing with IRS can greatly reduce your chances of some of the serious penalties that can be associated with tax evasion cases. There are varying levels of tax evasion penalties that can range from prison to small IRS penalties. At times, a tax relief attorney can even remove penalties that have been charged to the taxpayer if they can prove that there was a legitimate reason for not staying in compliance with tax regulations.
- Under criminal investigation by the IRS: Being investigated by the criminal investigation division of the IRS should never be taken lightly. If you are under investigation you should hire the highest level of tax professional that you can, which is a tax relief attorney. Individuals that are hired by the IRS to investigate individuals are highly trained by the IRS, FBI, and even carry guns. It is rare that individuals get investigated, but when they do it is likely for a serious matter. One thing to know about criminal investigations is that you may not know your are being investigated until you have already been charged with a tax crime. If you know you have done something with your taxes in the past that was not right and you fear you may be investigated, it is a good idea to talk with a tax attorney before any actions are taken.
- Committed Tax Fraud: If you have committed tax fraud (claimed false deductions, took fake tax credits, significantly understated income intentionally, or anything else that was done with the intent to commit fraud) and need the protection of the tax attorney client privilege, then it is a good idea to have a tax attorney on your side.
- Unfiled Tax Returns: Unfiled tax returns can be a serious issue, especially if there is a large sum of unpaid taxes that go along with them. If the filing of your tax returns does not have an legal or complex issues, it may be a better option to use a CPA or an enrolled agent to help (for the purpose of saving money).
- Tax Penalties: Tax penalties can be a significant portion of the total tax debt amount owed to the IRS. Many times these penalties can be significantly reduced by a qualified tax professional if they can show the IRS that there was a legitimate reason for not staying in compliance with IRS tax laws. Also, if all of these penalties cannot be paid it is likely that a tax attorney can find the next best solution for you in order to get back into compliance with the IRS.
- Tax Liens: A tax lien is the government’s claim on your property. A tax lien will give IRS rights to everything you own over any other debtor, which means it will significantly impact your ability to borrow money from anyone else. If a tax lien is not resolved it can likely lead to a tax levy, which will allow the IRS to legally seize your assets. A tax attorney can be a good choice to find the best option to get your tax lien resolved before it leads to further IRS actions.
- Tax Levy: The IRS can legally seize wages, bank accounts, real estate, cars, boats, 401K’s and more. When being faced with a levy it is important to act quickly to limit the financial impact of it. A tax debt attorney can likely stop the levy and prevent significant financial damage.
- Unpaid Taxes: There are countless solutions to resolving unpaid taxes. Of these solutions, some are supported by the IRS and others the IRS would never recommend. Having a tax attorney assess your situation from every angle possible can ensure you will get the best financial outcome, whether it is IRS recommended or not.
Tax Solutions a Tax Debt Attorney Can Help With
- Offer in Compromise Tax Settlements: An offer in compromise is a complex tax relief settlement that allows you to settle your taxes for less than the total amount owed. The most common situation in which the IRS will accept this sort of filing is if it can be proved that if the IRS were to forcefully collect taxes from the individual that owed taxes, they would collect an amount equal to or greater than the amount being offered in the offer in compromise filing. Proving this sort of thing is a complex task which should be handled by an experienced tax professional.
- IRS Payment Plans: The IRS offers various forms of payment plans. A tax attorney can help analyze your financial situation and determine the best type of payment plan to use, determine the monthly amount to be paid, and handle all related filings to get it properly setup.
- Penalty Abatement: Tax penalties can be partly or fully removed through penalty abatement. The IRS uses tax penalties as a way to frighten taxpayers into staying in compliance with tax regulations. The IRS does not want to punish those taxpayers that do try to stay in full compliance but have a legitimate excuse for not filing, not paying, or not filing accurately. The only way the IRS will remove these penalties is if proof is shown that there was reasonable cause for not staying in compliance with IRS tax regulations.
- Innocent Spouse Relief: An uncommon type of tax relief that many tax attorneys are aware of is called innocent spouse relief. When individuals are married and file a joint tax return, each spouse is then jointly and equally liable for the tax liability that is created. The IRS made innocent spouse relief because it realizes that at times it is unfair to hold both spouses liable for the tax liability that was created.
- IRS Bankruptcy: At times, but not often, bankruptcy can be an option to resolve IRS tax debts. This is one option that CPAs, enrolled agents, and the taxpayer advocate will not consider, but a tax attorney or bankruptcy attorney will. There are many complexities to dealing with bankruptcy and taxes since it is likely they will not be discharged. If your financial situation and tax situation meet a certain set of requirements, taxes may be discharged.
Tax relief attorneys or tax debt attorneys are highly trained tax professionals that can help resolve many tax problems by using a variety of tax solutions. Tax attorneys offer many benefits that other tax professionals do not and also are able to provide a wider variety of solutions than most other tax professionals. If you are being faced with a complex tax issue it is a good idea to consult with a tax attorney to see what types of solutions they would recommend for you.