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8 August, 2022

How to Choose a Tax Attorney

You may need the services of a tax attorney if you are launching a new business, are confronted with a complicated tax picture, or the Internal Revenue Service (IRS) is investigating you.  For any of these circumstances, and more, it would be a good idea to hire a tax lawyer for your small business.

What a Tax Attorney Does

A tax attorney is knowledgeable about tax laws, regulations, and policies at a few levels, and they are federal, state, and municipal. 

 There are approximately two types of tax law:

  •  Tax Planning
  •  Tax Controversies

Tax planning lawyers assist businesses and individuals with a high net worth arrange their financial matters in a way that minimizes their tax liabilities, while helping them avoid a tax audit by the IRS.

You could have reason to consult a tax planning lawyer if you plan to start or grow a business, or if you have to manage a considerable amount of money.

The tax controversies lawyer defends businesses and individuals against audits, investigations, or legal actions by the IRS or state tax agencies. You will look to this tax attorney if you are encountering tax debt problems.

This type of tax lawyer is also able to negotiate your tax debt or other issues with a government agency. Additionally, they can identify ways to settle your tax debt, advise you about how best to respond to an investigation, and defend your business in court.

Questions to Ask to Find the Right Tax Attorney for Your Business

What Type of Tax Matters Do You Manage?

Different tax lawyers handle distinct types of work. For example, an attorney who specializes in tax planning for businesses will likely not possess the expertise to negotiate a tax debt settlement for your company.

You want to search for a tax lawyer who regularly works with the type of law that is relevant to your particular case. For the best outcome in your legal tax situation, you will need an attorney who is well versed in the nuances and the details of tax law that pertain to your circumstances.

What is Your IRS Experience?

 If you are involved in a dispute with the IRS, or they will be auditing your business, you will want an attorney who is steeped in experience with IRS matters.  A lawyer who has extensive experience in IRS issues and controversies, and who is familiar with the inner workings of the IRS, will best suit your needs. What’s more, a lawyer who was employed with the IRS will even have a better grasp on how to effectively communicate with this federal tax agency.

 What Level of Education Do You Have?

 At minimum, a tax attorney should have a Juris Doctor, known as a J.D.  However, many tax lawyers possess a Master of Laws in taxation. A tax attorney with an L.L.M. (Master’s Law Degree) in taxation has demonstrated a commitment to being an above-average lawyer, and is academically qualified to work within the field of tax law.

 What is Your Communication Style?

 It is important to know how your potential new tax attorney communicates with her clients. For example, does she promptly return messages, or does she talk in a manner that you are able to understand the legal aspects of your case.  

 It is stressful enough to maneuver through a tax law process without having your anxiety compounded by having difficulty reaching your lawyer.  You have a right to demand clear and transparent communication from your attorney so you can feel confident about your knowledge of the case.

 Where Are You Licensed to Practice?

 One of the first questions to have answered when searching for the right tax attorney is where they are licensed to practice law.  You will want a lawyer who is licensed to practice in the court (s) that will hear your case, which would mean state court, federal court, U.S. Tax Court, etc.

 It is not that unusual for businesses contending with IRS issues to have state tax problems.  That it is why it is advised that you be sure to inquire about your tax lawyer’s state licensing.

 How Much Do You Charge?

 At the outset of your search, you need to know how much legal representation will cost your small business. So be upfront with a tax attorney and ask them about their legal fees. 

 How much a tax lawyer costs will depend on what type of law your case calls for, in addition to how they arrange their fees. You will find that some tax lawyers charge an hourly rate, while others charge a flat fee.  Yet, some will want to work on a retainer basis. When you have an attorney who asks for a retainer, this means you pay into a special account that your lawyer draws money out of as charges are incurred.

 In order to avoid unexpected costs during your tax law case, ask your attorney if there are separate charges for things such as copies or an administrator’s time.

 Learn About a Lawyer’s Reputation

 It behooves you to check into the reputation of your potential new tax attorney. This is the most effective way of determining if a particular lawyer is a good fit for your small business. 

Conduct an online search to find previous clients and learn what they have said about this attorney. Additionally, visit the state bar’s website and find out if this lawyer has ever been the subject of disciplinary action.  You also have the option of asking other attorneys about their reputation in the legal community.

Choose Drilldown Solution for Your Small Business Tax Planning Needs!

At Drilldown Solution, we are your one-stop shop for all financial management and business consulting for your small business. When you partner with Drilldown Solution, you gain access to the exceptional accountants and CPAs who can give you expert guidance and advice on all tax planning issues.

Drilldown Solution offers a full suite of financial services that includes bookkeeping, accounting, and tax preparation. We have the expert team to help any business thrive, even under the current COVID-19 pandemic circumstances. We accomplish this with a three-part system comprised of patient-experience excellence, financial focused operations, and accountability.

Our goal at Drilldown Solution is to put your small business in the best financial position possible, utilizing proactive processes and personal care!

Note: The material and contents provided in this article are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

Ed Gabriel is President and Partner at DrillDown Solution. With over 20 years of experience, he holds a bachelor's degree in accounting from Brigham Young University and is a Certified Public Accountant (CPA).