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Tax attorneys specialize in matters of tax law. These laws continually evolve and change, often making compliance a challenge. If you find yourself or your business up against complex tax challenges, facing issues with the IRS or simply want tax time to go a little smoother, a tax attorney can often be a powerful resource of expertise.
Here are a few notable reasons you might consider the help of a tax attorney in the months ahead.
Related: Why Business Lawyers Are a Necessary Expense
1. You are starting a business
If you’re launching a business but are also new to the process, hiring a tax attorney can provide the guidance needed to navigate the tax obligations that come with it. This includes ensuring compliance with federal tax laws and any state and local tax requirements likely to impact your enterprise. Having an advocate in your corner can provide the insight and support needed to understand your options while avoiding costly mistakes throughout each phase of the rollout.
Protecting your business, finances and assets requires preparation and adequate structuring. Some business transactions carry sizable tax consequences — and without knowing the potential implications, you could find yourself owning the IRS and state agencies more than you realize.
With the help of the right tax attorney, you’re often much better equipped to:
- Structure your company as a corporation, partnership or limited liability company
- Handle capital gains and losses
- Deduct off non-performing assets
- Structure profit-sharing or constructing pension plans
Regardless of the size or scope of your new business, how you approach tax management is key to avoiding problems and maximizing opportunity. An experienced tax attorney can help refine that approach and design a plan that positions you for success.
2. You are facing an IRS audit
Business owners aren’t the only people who can benefit from the help of a tax lawyer. While corporate partners or business owners are sometimes forced to undergo an IRS audit, anyone at nearly anytime is susceptible to audit notification. If this is your situation, you may hire an attorney to communicate with the agency and auditors on your behalf. You may use IRS Form 2848 to provide the tax lawyer power of attorney and represent you before the IRS.
Your legal representative has the power to receive tax information for the matter in question and the current tax year, though you can extend their access to additional reporting periods by listing them on the form. The right attorney can also help appeal some of the actions taken by the IRS after an audit and help you settle a debt or make an offer in compromise with the IRS.
Please note that a CPA is not the same as a tax attorney. While certified professional accountants generally help with such tasks as initial tax preparation and minimizing the risk of an audit, such professionals typically aren’t certified legal professionals and, therefore, can’t represent you in court. Tax attorneys help you with tax compliance and defense.
Related: What I Learned From a Two-Year IRS Audit
3. You are seeking tax-exempt status
A Section 501©(3) status is for non-profit organizations like charities, private schools, churches and private foundations. Not every organization is eligible for this tax exemption status, and a tax attorney can guide you through the IRS application process for nonprofit status. Depending on the nature of your organization, there are different forms to complete and an attorney can help determine your eligibility for a particular sector.
4. You are handling estate taxes or probate matters
Tax attorneys can handle estate planning and the taxes related to decisions before or after an individual passes away. If your plan is to leave your business or related assets to a spouse or children, there are tax laws that could take a sizable portion of their funds away. Estate taxes are a concern that a tax attorney can address when you are estate planning.
If you are the recipient of an inheritance, you may have additional tax liabilities. If you don’t know where you may be liable, hiring a tax attorney can provide the expertise to understand and navigate those obligations without running afoul of the IRS. It’s common for people to utilize both a CPA and a tax attorney throughout such a process.
5. You are facing a tax-related investigation
If you’ve been charged with tax fraud and are under criminal investigation by the IRS, it may be best to consider the help of a professional. Convictions of tax fraud often come with hefty fines and sometimes even significant prison time, making it important to have the best representation possible. Additionally, tax attorneys don’t have to testify against their clients, something that can’t be said about a CPA. Tax attorneys can also help fight a tax lien and work out tax debt payment options.
6. You are unable to meet your tax burden
Owing money to the IRS can put you and your business in a difficult position, especially when the IRS demands payment terms you can’t meet. Falling behind on your tax burden complicates the problem, but a tax attorney can help. Your attorney can help gather evidence to build a case for a smaller payment or debt plan, potentially negotiating lower payments and a more reasonable period of time for debt repayment.
Related: All Business Entities Are Not Created Equal: Finding the Perfect One for You
Facing your tax concerns with a tax attorney
Tax attorneys can help you find relief from legal action taken by the IRS. They can also work with you to proactively prevent tax law issues. But no matter your situation or needs, working with a tax attorney can help ensure you and your business are prepared for any tax-related challenges that lie ahead.
https://www.entrepreneur.com/money-finance/6-common-scenarios-when-you-might-need-a-tax-attorney/452190