Tax lawyers can help you through a tax controversy—or help you avoid one by carefully planning your estate or business. But to get the right lawyer for your needs, you should know what to look for.
To reduce the high anxiety associated with hiring a lawyer and to help you avoid making snap decisions, we've put together a list of seven tips on what to ask a tax lawyer to ensure the services they provide fit your needs.
What a Tax Lawyer Does
As personal finance website The Balance explains, there are roughly two types of tax law: tax planning and tax controversies. Tax planning lawyers help businesses and people with high net worths arrange their financial affairs in a way that minimizes their tax burdens and helps them avoid a tax audit. You might want to talk to this kind of tax lawyer if you're starting or growing a business—remember that the IRS considers "gig work" self-employment—or if you need to manage a lot of money.
The other type of tax lawyer defends individuals and businesses against audits, investigations, or legal actions by the IRS or state tax agencies. This is the kind of lawyer you hire when you have tax debt problems. They may negotiate your tax debt or other issues with a government agency, find ways of settling your tax debt, advise you about how best to respond to an investigation, defend you in court, and more. They also handle communications with the government for you.
How to Find a Tax Lawyer Who Meets Your Needs
You should be able to narrow your search right away by looking for a lawyer who handles the kind of matter you have—business or personal. There are some important differences between business taxes and personal income taxes, and tax lawyers may specialize in helping one kind of client or the other.
After that, San Diego tax lawyer Sam Brotman suggests using word of mouth, including online reviews as well as people you know. You can also search our network of attorneys for businesses or individuals. Once you have some possibilities, you should be able to interview them—after all, you're the client—about their background and their assessment of your case. Here are some questions to ask:
- What kind of tax work do you handle? Different tax lawyers handle different kinds of work, and someone who specializes in tax planning for business may not have the expertise to negotiate a tax debt settlement for an individual. The right lawyer for your needs is one who frequently handles the kind of work you need done.
- How much experience do you have with my problem? A brand-new lawyer may be less expensive. But if you have a complicated tax situation, you may be best served by someone who has extensive experience with similar situations.
- Where are you licensed to practice? You need someone who's licensed to practice in the court(s) that will hear your case, which could mean state court, federal court, U.S. Tax Court, or others. It's not unusual for people with IRS problems to also have state tax problems, so be sure to ask about the tax lawyer's state licensing. Finding out where a tax lawyer is licensed also gives you another glimpse into their experience.
- How much do you charge? You need to know what you're getting into, especially if money is a concern. How much a tax lawyer costs depends not only on what kind of case you have, but also how the lawyer typically arranges fees. Some charge an hourly rate; some charge a flat fee; and some ask for a retainer, which means you pay into a special account that the lawyer draws money out of as charges are incurred. Be sure to also ask whether there are separate charges for things like copies or an administrator's time.
- How will you keep me informed? Especially if you have a tax debt problem, you may be anxious for updates. The tax lawyer should be able to explain when you can expect to hear about your case, how they prefer to contact you, and who in their office will handle the communications.
- Who will do the work? It's fine if a paralegal or an administrator does some of the basic work, but watch out for organizations that charge you for a lawyer's time and then have someone else handle the case.
- Why do you practice tax law? Tax attorney Tyson Cross suggests this question not because any particular answer is correct, but because it gives you some insight into the lawyer's motivations and personality. For example, Cross enjoys being able to alleviate "the gut wrenching pain of real people" with serious financial problems. This answer can help you decide whether you'd work well together.