Are Tax Attorneys Worth the Cost?

There are different kinds of professionals in the tax business, making sure we have all of our ducks in a row when it comes to anything and everything tax related. There are tax accountants, financial experts who know the ins and outs of tax laws and can help you plan and file properly. A tax attorney is a lawyer well-versed in tax law, whose job it is to handle technical and complicated legal dilemmas related to your taxes. 

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How much does it cost to hire a tax attorney? 

Depending on your tax situation, you might feel the need to hire a tax attorney—but how much should you expect to pay? It depends. Some tax attorneys will charge you an hourly rate, while others will charge you a one-time fee for their services. 

There are benefits and drawbacks to both, but here is the basic breakdown:

    • Hourly rate: You’ll find that most tax attorneys charge an hourly rate. Every tax lawyer is different, but most will charge anywhere between $200-$400 per hour to help you with your tax situation. If you’re seeking legal advice from a lawyer in a major city or big law firm, you might be looking at upwards of $1,000 an hour for help with your tax problems. 
  • Flat fee: Other lawyers will charge a “flat fee” for their services. A flat fee is a one-time charge, no matter how much time the lawyer spends on your tax case. Most of the time, flat fees are only implemented on the more simple, routine cases.

As you can imagine, an hourly rate is a great option if it turns out that your case was fast and easy to close. But sometimes, this isn’t the case and it can turn out to be expensive. If you have a particularly complex case, you can always ask the lawyer to charge you a flat fee, but they may not be open to the idea if there is a lot of work involved.  

Reasons to hire a tax attorney

The Internal Revenue Service (IRS) doesn’t just audit individual taxes. They’re busy bees who also audit estates as well as businesses. It might be time to hire a tax attorney if you need assistance in any of the following situations: 

  • You are starting a business: You will need to know what kind of business entity you plan to set up and whether or not you plan to incorporate. Are you able to function as a sole proprietor? When it comes to starting a business, any decision you make will affect how you do your taxes. 
  • You expect to have a taxable estate when you die: The amount that the total value of your estate would have to surpass in order to be considered a taxable estate usually changes every year, but currently, the threshold is around $5.6 million and $11.2 million if you are married. Your heirs would then be responsible for paying an estate tax of up to 40%. If this resonates with you, a lawyer could help you with an estate planning game plan to make sure that the bulk of your estate doesn’t end up going to taxes. 
  • You have to go to tax court: If you are in a sticky situation with the IRS and are being criminally investigated, you might want to seek out the help of a lawyer to take a look at your case before you have to appear in court. 
  • You participate in international business: This might be a situation where you need legal advice or guidance looking over contracts.

Responsibilities of a tax attorney

A tax attorney, or a tax lawyer, is a lawyer who extends legal advice and guidance pertaining to various sectors of tax law to corporations and individuals having a high net worth. In other words, it’s a tax attorney’s job to work out the nitty gritty details of complex tax situations and make sure that you are abiding by the law so that you don’t end up in any major trouble.  

Some of their duties and responsibilities include:

  • Monitoring legislative developments so that they can give directions to their clients accordingly, often working closely with corporate counsel. 
  • Understanding the ins and outs of estate law and specializing in estate planning.
  • Being prepared to appear in front of taxing authorities from the federal, state, and sometimes local sectors. Basically, the IRS is picky when it comes to what kind of tax professional is suitable to represent a taxpayer in the event of an audit, but a tax attorney will fit the bill. 
  • A number of sub-specialties underneath the broad umbrella of tax law, including tax litigation, municipal finance, general corporate tax, executive compensation, international tax planning and exempt organizations. 

Career-wise, tax attorneys must jump through a number of hoops in order to qualify to sort out your complicated taxes and are therefore well-prepared to deal with these obligations.