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When Is It Worth It to Hire a Tax Attorney?

When you’re dealing with a tax issue, it’s normal to ask yourself whether it’s something you can take care of on your own or if it’s time to bring in a tax attorney. With IRS letters piling up and deadlines on your mind, the last thing you want is another expense. And if the problem doesn’t seem too serious, handling it yourself can feel like the more straightforward, affordable path.

The truth is, not every tax issue requires professional legal help. In some cases, you can set up a payment plan, amend a return, or respond to a notice on your own. However, there are also times when hiring an experienced tax attorney can protect your finances, your business, or even your personal freedom.

This guide will help you figure out where your situation falls. We’ll walk through the types of tax problems that are fine to handle on your own, the scenarios in which an attorney is essential, and the gray areas where expert help might be worth the investment, especially if it brings peace of mind or a better outcome.

When You Can Probably Handle It Yourself

Not every tax issue calls for legal help. If you’re organized, have the time, and your situation is relatively simple, you might not need a tax attorney at all. The IRS offers online tools, and many problems can be resolved with a phone call or by following the steps in your IRS notice.

Here are some of the typical tax problems that you may want to handle on your own:

You owe under $10K and can afford to pay over time.

If you owe less than $10,000 and can pay it off gradually, you probably don’t need legal help. The IRS makes it easy to apply for a monthly payment plan online. As long as your filings are current and your record is clean, approval is usually simple.

You received a confusing but non-threatening IRS notice.

Letters like the CP14 or CP501 can look serious, but they’re often just routine reminders that you owe taxes. If you understand the notice and agree with it, you can likely handle it by making a full payment, setting up a payment plan, or calling the IRS for clarification.

You just need to amend a past return.

If you made a simple mistake on a return – like not reporting some income or forgetting a deduction – you can usually fix it by filing Form 1040-X. Tax software can help, and if you prefer to hire a pro, a tax preparer, enrolled agent, or CPA can handle it. You don’t necessarily need a lawyer. However, if the mistake is complex or you’re worried about criminal exposure for potential tax fraud, then an attorney is critical.

You want to apply for penalty abatement.

If you have a clean record and a good reason for missing a payment or deadline, the IRS might waive your penalties. Many people request First-Time Abatement by phone or with a brief written explanation; no attorney is required unless your case is more complex, you have several years’ worth of penalties, or you don’t qualify for first-time abatement. Remember that you only get one First-Time Abatement in your life, so if you have been assessed a small penalty, you might be better off paying and saving your FTA for a bigger issue in the future.

Situations in Which Hiring a Tax Attorney Is Essential

Some tax problems are simply too serious or too complex to tackle on your own. Although an attorney costs money, their fees help you avoid unnecessary tax assessments, penalties, and involuntary collection actions – perhaps, even more importantly, they can reduce your stress and give you peace of mind.

In the situations below, having a tax attorney on your side is often necessary to protect your finances, your business, or even your freedom.

You owe a significant tax debt you can’t pay.

If your tax debt is over $50,000, it’s likely to draw more attention from the IRS. At that level of tax debt, the resolution process also gets more complicated and can be harder to deal with on your own. For example, taxpayers who owe over $50,000 may need to file a collection information statement when applying for a payment plan, or they may need to look into more complicated relief options such as an offer in compromise or innocent spouse relief.

A tax attorney can help you sort through your options and speak with the IRS on your behalf, to make sure your case is presented in the best possible light.

You’re being audited, or suspect one is coming.

If the IRS notifies you of an audit, or if you think one is on the way, it’s smart to bring in legal help. Tax audits can be complex or straightforward, but saying the wrong thing or providing the wrong documents can result in penalties or a further investigation.

Even if you filed your return correctly, you may face an unwanted tax assessment if you’re unable to back up the information on your return. A tax attorney can guide your responses and deal with the IRS on your behalf. They can also help you appeal if the auditor issues a decision that you don’t agree with.

You’re accused of tax fraud or evasion.

Being accused of tax fraud or tax evasion is a serious matter. These situations can lead to heavy fines or even jail time, so it’s essential to have a tax attorney who can protect your rights and guide you through the process.

Tax evasion is always criminal in nature. Tax fraud, in contrast, can be criminal or civil – with civil tax fraud charges, you don’t have to worry about imprisonment, but the penalty can be up to 75% of the tax you failed to report.

You’re a business owner with complex taxes.

Owning a business can make your taxes a lot more complicated. Issues such as payroll taxes, contractor vs employee classifications, sales and use tax, business tax returns, or taxes in multiple states can lead to problems with the IRS and state tax agencies.

Getting behind on business taxes can lead to significant penalties, personal liability for business taxes, loss of professional or business licenses, and ultimately, business closure. When things get messy, having a tax attorney can help to protect your business and get you back into good standing with the IRS or your state.

Your assets are at risk (levy, lien, garnishment).

If the IRS is coming after your wages, bank account, or property, it’s time to get help. These actions mean the agency is serious about collecting, and a tax attorney can step in to protect what you own and help you figure out the next steps. If you receive a Final Intent to Levy notice with your right to a hearing, you should contact a tax attorney immediately – these letters give you a 30-day warning, and then, the IRS can seize your wages or assets.

The Grey Areas: When an Attorney Might Be Worth It

There are some tax problems that you might be able to solve on your own, but an attorney can streamline the process, help you avoid mistakes, provide you peace of mind, and potentially even save you money. Let’s take a look at some of those grey areas:

You don’t have the time or energy to deal with the IRS.

Sometimes it’s not a question of whether you’re capable of handling a tax issue, but whether you have the time and energy to deal with it. Long calls with the IRS, confusing forms, and endless follow-ups can wear you down, especially if you’re already balancing work, family, or other stresses. In such cases, it can be a relief to hand it over to someone who deals with this issue every day.

You want peace of mind and accuracy.

There’s a big difference between filing your taxes late and facing the kind of situation where professional help is no longer optional. For example, one Reddit user ran a successful online business and paid an estimated $20K toward taxes that year – but never actually filed a tax return. Years went by, and no federal, state, or sales tax returns were filed.

The IRS eventually filed a substitute return on their behalf, claiming they owed $400K. Connecticut even levied the taxpayer’s bank account for $7000. Now they’re stuck between CPAs and attorneys, unsure who can actually help and how much it should cost.

This kind of scenario is exactly where peace of mind matters. Sure, a CPA can prepare back tax returns, but once the IRS starts filing for you and issuing levies, you’re deep into legal territory. A tax attorney not only knows the law but can step in to deal directly with the IRS and state tax agencies.

You’re considering CNC, OIC, or PPIA.

The IRS offers several programs to assist individuals who are unable to pay their full tax debt. These include:

  • Currently Not Collectible (CNC): You prove that you can’t afford to pay anything right now.
  • Offer in Compromise (OIC): You settle your debt for less than what you owe.
  • Partial Payment Installment Agreement (PPIA): You make smaller monthly payments until the collection statute expiration date, and then, the remaining balance is effectively waived.

It’s possible to apply for these relief options on your own, but getting approved isn’t easy. The IRS denies most OICs, and the paperwork can be time-consuming and technical. A tax attorney can help you understand which option is best for your situation, make sure the forms are complete and accurate, and improve your chances of approval. For many people, that guidance is worth the investment.

Assessing Your Situation: Is It Worth the Cost?

Before you decide whether to hire a tax attorney, think about what the problem is costing you. If it’s something simple and you’ve got the time to deal with it, handling it yourself might work out fine. The IRS has online tools for payment plans, and in many cases, that’s all you need.

But if the issue feels confusing or stressful – or if you’re worried about making a mistake – getting help can make a big difference. A tax attorney can step in, sort through the details, and deal with the IRS for you. Sometimes, just knowing it’s being handled the right way is worth the cost.

Alternatives to a Tax Attorney

Not every tax issue requires the assistance of an attorney. For nearly all tax problems, an Enrolled Agent (EA) is another good option, especially for help with filing, audits, or setting up a payment plan. They’re licensed to represent you before the IRS and can often handle many of the same tasks as a tax attorney, sometimes at a lower cost. Unless you need someone to represent you in Tax Court or defend a criminal tax investigation, an EA may be the best fit. That’s why we have two EAs on staff here at McLaud Law P.C.

What about a CPA? Certified Public Accountants are great choices for preparing tax returns and maintaining proper bookkeeping, but very few CPAs have experience in tax defense. If you have a significant tax problem, having a representative who is experienced in and focused on tax defense is vital to getting the best outcome. That usually means hiring a tax attorney or Enrolled Agent.

What about a big tax relief company? You’ve probably also seen ads for tax relief companies promising significant savings fast. If you’re thinking about calling one of those firms instead of an attorney, be careful. Many of those firms offer one-size-fits-all solutions and pressure people into signing expensive contracts. McLaud Law P.C. takes a personalized approach, offering support tailored to your actual needs, not a scripted solution and a sales pitch. We have had many clients come to us after paying large sums of money to a big tax relief company and getting no results.

If your case is relatively simple and you’re comfortable handling paperwork, the IRS offers online tools and forms that can assist you. From applying for a payment plan to amending a return, many steps can be done yourself with a bit of time and patience. But in other cases, an attorney is indispensable.

FAQs About Hiring a Tax Attorney

Still wondering whether you need a tax attorney to represent you? These frequently asked questions can help clarify:

What’s the difference between a CPA and a tax attorney?

Although both can represent you in front of the IRS, CPAs typically focus on accounting and tax preparation, while tax attorneys are trained in tax law and tend to be the better choice for legal disputes. Ultimately, you want a tax pro who has experience with your particular type of case or concern.

How much does a tax attorney cost?

Costs vary depending on the complexity of your case, but many tax attorneys charge flat fees for standard services, while others charge hourly or retainer rates. The attorney should be able to give you an idea of their fees and how they charge clients during the initial consultation.

Can I switch from a CPA to a tax attorney mid-case?

Yes, you can switch from a CPA to a tax attorney at any point. If your situation becomes more serious or legal issues arise, consulting a tax attorney can help protect your interests.

What’s a power of attorney, and do I need one?

A power of attorney lets someone, like a tax professional or attorney, speak to the IRS and act on your behalf. You don’t always need one, but it’s required if you want the attorney to fully handle your case with the IRS.

Tax Help When You Need It

You don’t have to figure everything out on your own. McLaud Law offers consultations, allowing you to discuss your situation before making any decisions. There’s no pressure to commit, but knowing your options can bring real peace of mind.

At McLaud Law P.C., you won’t get a one-size-fits-all answer or be passed around a call center. You’ll receive honest guidance tailored to your needs, handled by someone who understands the stress that tax problems can cause. If you’re ready to take the next step or would like to discuss further, please get in touch here.

This communication is Attorney Advertising. It is presented for informational purposes only and does not constitute legal advice. Every legal situation is different, and prior results do not guarantee a similar outcome. This communication does not create an attorney-client relationship between McLaud Law P.C. and the recipient.