When to Hire a Tax Attorney

What a tax attorney does

A tax attorney is a lawyer who specializes in tax law. Tax attorneys help people arrange their finances to optimize their tax situations, comply with tax rules and handle disputes with the IRS or other tax authorities. Some specialize in areas such as estate, international or business taxes.

  • Tax attorneys often practice at law firms or accounting firms. Some may be solo practitioners, meaning they own their businesses and work for themselves.
  • Tax lawyers at law firms tend to advise clients about what to do to get favorable tax treatment in various situations. They may draft contracts or other legal documents needed to make it happen, and they may represent clients in tax court or elsewhere.
  • Tax lawyers at accounting and consulting firms tend to help clients more with complying with tax rules.

When it’s worth hiring a tax attorney

Some situations may be especially suited for hiring a tax attorney.

Estate planning

A tax attorney can help you devise estate planning strategies and handle the paperwork involved in minimizing estate taxes, transferring assets to family members, setting up trusts and other tactics.

Starting a business

A tax attorney may be able to help devise tax-smart strategies for starting, buying, selling or expanding a business.

Tax disputes

If you have a tax dispute; want to sue the IRS, the state or a local tax authority over a tax matter; or if you want a hearing before the U.S. Tax Court, a tax attorney can help.

Tax relief

If you have an outstanding balance with the IRS or other tax authority that you want to negotiate or contest, a tax attorney may be able to help you pursue options such as:

  • Offer in Compromise
  • Innocent spouse relief
  • Installment plans to pay tax bills over time

What to look for in a tax attorney

Here are three things to check for.

  1. A law license. An attorney must have a law license to practice law. You can verify whether a tax attorney has a license to practice law in your state by searching your state’s bar association website.
  2. Signs of advanced education or specialization. In most states, you must also graduate from law school in order to get a law license. Some tax attorneys have a master’s degree in taxation (called an LL.M). Some tax attorneys also have CPA licenses, which means they are also certified public accountants.
  3. A preparer tax identification number (PTIN). Anybody who prepares tax returns in exchange for compensation must have a PTIN from the IRS. The preparer must sign your tax return and provide a PTIN.

How much a tax attorney costs

In general, legal work isn’t cheap. According to a survey by Martindale-Avvo, a legal marketing and directories firm, tax attorneys charge $295 to $390 per hour on average. The attorney’s length of experience can move the figure lower or higher.

The firm also has data showing 37% of people who use legal representation for taxes spend from $0 to $5,000, and another 14% spend $5,000 to $100,000. About a quarter have the work done pro bono, or free of charge, and 4% have it done on contingency (where the attorney receives a portion of the damages if any are awarded).

How to get free legal help

You might be able to get free or low-cost help from a tax attorney by visiting a low-income tax clinic, known as a LITC, in your area. These clinics represent people with income below certain levels and who need to resolve tax problems with the IRS. LITCs can represent you in audits, appeals and tax collection disputes before the IRS and in court. LITCs can also help people respond to IRS notices or fix account problems. You can locate a local clinic on the Taxpayer Advocate Service website.

Can also read: Tax Evasion vs. Tax Avoidance