Tax Attorneys: When You Need Legal Assistance With Your Taxes
Tax attorneys are sometimes confused with tax accountants. While there may be some minor overlaps, they are two distinct jobs. If you are only looking to file your taxes, you need a tax account. If you are having legal issues with your taxes, then you need to hire a tax attorney. Tax attorneys are lawyers who specialize in tax laws. They are most commonly associated with fraud cases, but there are many other situations where you may need a tax attorney as well.
If you are under any sort of audit, you need a tax attorney, but it is also advisable to speak with a tax attorney when you are starting a new business or you are planning your will and want to leave behind large gifts to your family members, such as property. If you owe back taxes, you can also work with a tax attorney to renegotiate your payment plan.
Investigating Tax Fraud
Income tax fraud usually involves a taxpayer taking steps to either avoid paying taxes, or to pay less than is owed in taxes. It involves lying about what was earned or circumstances that make the taxpayer eligible for deductions or credits. Some tax fraud charges, however, don't involve money at all. The IRS can charge you with fraud even if the error in your return doesn't mean you owe the IRS more money. For example, filing your taxes under the wrong Social Security number is fraud. The IRS usually adds non-monetary charges to charges that do involve money, such as if you lie to the IRS investigator during an audit. Lying to the auditor is usually a separate charge.
The IRS usually investigates fraud only when large amounts of money are involved, at least as a criminal offense. If you incorrectly claim a credit, and if it results in you paying the IRS $500 less, you're not likely to go to jail. However, you'll probably be hit with penalties and interest. If your fraudulent return results in a significant gain to you, you could go to jail. You'll also still owe the money that you avoided paying, and you'll owe steep civil fraud penalties on top of the usual IRS penalties and interest.
Because of how complex tax laws are, you do not want to try and solve your tax fraud on your own. You only increase the chance of making another mistake, which could land you in more trouble with the IRS. Tax attorneys understand tax laws and will work directly with you to ensure you are filing the correct information and fixing whatever error caused your taxes to get flagged in the first place. Not only are you correcting the mistake, but by working with an expert, you will learn exactly what went wrong and will be able to avoid making the same mistake in the future.
Business Tax Laws
Another reason it is common to hire a tax attorney is for business reasons. Business taxes are even more complex than paying personal taxes. Depending on your business, your personal and corporate taxes may be linked together, which creates additional obstacles. The IRS is also much harsher on businesses, so you do not want to risk making any mistakes.
Buying or selling a business uses a different set of tax laws than starting a business. The exact process changes depending on how the business is classified. No matter what the classification, large amounts of money are being exchanged. If you are buying a business, it becomes even more complicated, since you are working with the financial information of the seller as well. Whoever is selling the business wants to make the numbers as favorable as possible. If the seller ends up making any mistakes, you are equally responsible. With a tax attorney on your side, you know everything is above board, and all the correct numbers are being reported, and everything that needs to be taxed, is. You may also be eligible for a host of discounts as well, which a tax attorney can file on your behalf.
Starting a business is less complex than buying or selling a business, but it still helps to have an attorney on hand. The biggest way an attorney can help is telling you what type of corporation to file as. This has a tremendous impact on how much you owe in taxes, as well as whether your business is a separate entity, or tied to your personal account. There are pros and cons for each classification, as well as different discounts and exemptions, which a tax attorney can help you work through.
Finding a Tax Attorney
Finding a tax attorney takes time, but it is not something you want to rush. Many tax attorneys specialize in specific areas, so before you commit to an attorney, make sure you set up a consultation to determine whether he or she can help you. If you are searching for a tax attorney online, make sure he or she is admitted to the state bar. If you find a promising attorney, but he or she is too busy to take your case, do not be afraid to ask him or her for a recommendation.
Once you do find a potential attorney, be sure to ask questions regarding payment. If you are having financial trouble, you may be able to apply for assistance through the Taxpayer Advocate Service, which offers either free or discounted assistance to eligible taxpayers.