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When Do You Need a Tax Attorney?

Written by prositesfinancialJun 16 • 2 minute read

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Tax attorneys are lawyers specializing in complex and technical tax law. If you ever face technical and legal issues associated with taxation, you can get professional help from a tax attorney. Although an attorney can step in after you’ve encountered a problem, consulting with one in advance can help you avoid tax problems in the first place. Here are some situations in which you may need a tax attorney.

Starting a New Business

When setting up a new business, you need to answer many legal questions, which have tax implications. The type of business entity you set up, such as a sole proprietor or partnership, will affect your tax obligations. A legal counsel can advise you about the correct structure and tax ramifications for your business, including non-tax issues you might overlook. If you operate an international company, it will complicate your tax treatments, contracts, and other legal matters. A tax attorney can be an invaluable support in this type of situation.

Buying or Selling a Company

Buying or selling a company always comes with significant tax consequences, regardless of the type or size of the business. A tax attorney can guide you on the best way to structure your new enterprise or minimize your tax exposure during the acquisition or sale, helping you identify various options available and evaluate the tax benefits against the drawbacks before committing.

Succession Planning

Million-dollar estates that meet the IRS minimum value threshold usually face a significant tax burden once the property owner has passed on. It means that a healthy chunk of the wealth could become the federal government’s property before it’s transferred to the heirs. Although most people don’t have to worry about the estate tax, if you have an estate with significant value, you’ll need the help of a tax attorney to minimize this burden and ensure that your loved ones take the slightest tax hit possible. A tax attorney can map out estate planning strategies to safeguard your assets and always place you below the current value threshold.

If You Receive an Audit Notice

Facing an IRS audit can be a painful and time-consuming endeavor, putting undue strain on your family. An audit also creates plenty of room to make mistakes that could lead to more significant IRS penalties.

Working with a tax attorney throughout the IRS audit process can help you prevent further errors and ensure everything is submitted to the IRS as required. Your attorney may also negotiate a compromise and reasonable settlement plan if you face additional tax debt. A tax attorney is also in a perfect position to protect your rights and interests if you choose to contest the results of an audit through an audit appeal.

Talk to a Trusted Professional

When you decide you do need a tax attorney, look for one who is specifically qualified for your needs. Typically, a tax attorney must have a Juris Doctor degree (or a “J.D.”) and be admitted to the state bar to practice. Other than the minimum requirements, tax attorneys also get advanced training in law such as a master’s degree in taxation (or an LL.M.).

Choosing the right professional is essential to managing your tax situation and maximizing your refund. Whether you’re facing significant life changes, or something has gone wrong, a tax attorney can be a great help. If you already work with a CPA or other financial professionals, ask for a recommendation.

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