Why You Need a Tax Attorney

Without expert guidance, individuals and business owners often find themselves at the mercy of the IRS. The IRS runs on an ignorance is no excuse philosophy. There are no breaks for failing to understand your tax obligations. No one ever got out of an audit by complaining that they simply do not have the skill and knowledge to apply all of the rules in the 1,700 pages of regulations. Even if complying with all of the regulations is not humanly possible and you are the most honest person in America, you can find yourself in hot water with the IRS. Tax attorneys take all this burden off of their clients. They know the voluminous Internal Revenue Code inside out. They can answer questions about deductibility and taxation statuses. They can prepare returns so that they are unlikely to be audited. Should an audit take place, they are in a strong negotiating position because they have the knowledge and ability to take the IRS to court. We all have only so much time and energy. Who wants to spend it worrying about IRS issues? A tax attorney can lift the IRS burden by helping clients in the following ways.

Your time is your greatest asset. As a business owner, the phrase time is money is literally true. Each hour you spend dealing with IRS record keeping, researching compliance requirements, mining the Internal Revenue Code for deductions, and trying to defend yourself in an audit takes away from developing your enterprise. You need to be out selling to clients, making improvements to your product, networking, and finding ways to expand. The hour that you spend fretting over IRS concerns is the hour you could be making the sale of your life.

By hiring a tax attorney, you can save many hours of research. The attorney can explain the rules and what needs to be done for compliance. She also provides important advice for record keeping. Often, when a business is audited, countless days are wasted in trying to track down and recreate documentation because no one knew what needed to be kept in the first place. Clients of tax lawyers are advised on what to keep, and if the IRS comes calling, they are prepared.

The tax year is the 12-month period that taxes are calculated for. For individuals, it is the calendar year. For businesses, the 12-month period can often be chosen. An adviser can work to maximize deductions for each year. In the case of a business, the choice of the 12-month period can have several advantages. It is always finest to choose a period that coincides with a season that makes tax-return preparation convenient. It is also important to choose a period that allows for proper and full collection of documents. If an accounting department is involved, consider choosing according to when those resources are finest deployed and most affordable. A taxation attorney can change the year according to the needs of the business.

If you are under criminal investigation by the IRS or facing criminal charges, always find an attorney experienced in those proceedings. Criminal charges may result from fraud, which often takes the form of claiming deductions illegally. Charges can also stem from evasion, such as hiding income for the purposes of avoiding payment to the IRS. These charges can bring heavy penalties. With the help of an experienced litigator, charges may be dropped or reduced. The sooner in the process you contact an attorney, the better your chances. It is important to keep in mind that all communications with an attorney are protected by attorney-client privilege.

State and local revenue departments can pose challenges for businesses or individuals who make purchases or do business out of their state or local areas. For businesses, income is frequently derived from out-of-state sources, which can lead to complex issues for state taxes. They may also be subject to certain taxation implications for purchases of capital investments. Individuals who have out-of-state property, particularly out-of-state residences or out-of-state rental properties, may have a variety of questions about state taxation. A tax attorney can help create the finest situation for individuals and businesses dealing with state-revenue issues.

When you see a CPA, communications are not necessarily privileged. Communications with lawyers are always privileged. Though the IRS rules provide that communications regarding taxes between a client and a CPA are privileged, this privilege only applies to civil proceedings. Should a CPA’s client be accused of tax fraud or evasion, the CPA can be compelled to give evidence against his client. Also, the CPA privilege is not applicable to civil or administrative proceedings brought by a government agency other than the IRS. For example, the Securities and Exchange Commission could compel a CPA to give evidence against his client in civil or criminal proceedings.

Tax attorneys can help businesses and individuals with complex forms. In the case of individuals, when dealing with complex IRS issues, it is better to let a professional handle all of the complex taxation questions, both as a way to minimize financial liability and save precious time. When starting a business, consulting a tax attorney is always prudent and very affordable. Questions about what type of entity should be set up are finest answered by a lawyer who has an understanding of the Internal Revenue Code and your unique needs. Legal counsel advises on tax treatment of a business and can complete any necessary forms.

These money savers are crucial to the financial success of both businesses and households. The Internal Revenue Code provides for many deductible expenses, and as businesses and individuals earn more money, these subtractions from gross income become increasingly important. For a deduction to be valid, it must correspond to a specific section in the Internal Revenue Code. A qualified tax attorney knows the ins and outs of the code and can recommend where they can be taken, and recommend against certain deductions that might trigger an audit.

IRS audits can quickly become expensive, scary experiences. Interest and penalties may be assessed on top of additional taxes. If these add up to more than an individual or business can afford to pay, the subject of an audit can find their property quickly subject to IRS tax levies and liens. Having an attorney on your side during an audit can prevent these consequences. The attorney knows the Internal Revenue Code. The IRS knows that good tax lawyers are experts and is likely to negotiate favorably with a tax attorney. The IRS also knows that the attorney can take the case into tax court if he disagrees with the findings.