Is Your Tax Attorney Worth the Cost?

Filing taxes is a government requirement. However, you are not obliged to subscribe to the services of a tax attorney and can file all the tax-related documentation yourself. Still, there is no harm in getting help from an experienced professional, especially when that April deadline is fast approaching, and you’re already swamped with work. In fact, a professional tax attorney can even help you save more than you would have if you had filed the taxes yourself. However, it can also be a more expensive choice, that is why it’s important that you consider the following factors before hiring a tax attorney.

Performance in the Past

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There are two things which necessitate that you hire a tax attorney: either not having filed taxes in the year preceding the current one or owing money of significant amounts to the IRS. A lawyer can help you navigate through legal notices and other tools used by the IRS on your behalf, and also is better equipped to find errors in the investigation and act as your advocate through it.

Accounting for Changes

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A lot can change within a year, and it is up to you to figure out exactly which of those changes you must include in your tax filing. There are two kinds of changes you must report: an increase in asset or liability, and a decrease in asset or liability.

For example, if you moved assets to fund some expenditure, this information must be reflected in the new tax filing so that the national database may be updated. It is important that all changes are documented, and a lawyer can help you in that regard. A lawyer can also show you how those changes will impact your finances in the future, and whether there are changes, if any, you can make to your current asset composition to avail tax benefits.

Your Finances in the Future

Tax attorneys are in a better position to recommend the best asset ownership structure considering prospective changes in tax law. Since you are not aware of future tax law until it happens, it is very difficult for you to take advantage of it, a task which a tax attorney can easily fulfill.

This is especially true for small businesses and those who are looking for tax savings on their freelance income. Since a lot of profit and income is taken away in tax charge, it is important to get professional help.

How Much Do Tax Attorneys Charge?

There are two types of payments tax attorneys can charge: hourly and flat-fee. Since the service provided by tax attorneys requires an intensive work, most of them charge an hourly rate ranging between $200-$400 per hour. Attorneys that are popular or work for big legal firms can charge as high as $1,000 per hour as well, so there is a whole range of tax attorneys you can choose from considering your budget and complexity of your case.

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Attorney Costs for Different Tax Issues

If you need a tax attorney to complete an installment agreement for you, you can hire one for a total charge of $750-$1500. For an Offer in Compromise, a fee of $3500 to $6500 is usually charged by them. For Penalty Abatement, $1000 to $2500 is charged. In case of an IRS Audit, a simple one would result in a charge of $2000 to $3500 and a complex one would result in a charge of $5000+. Filing an appeal with the IRS costs around $5000 to $7500, and a case of litigation with the US Tax Court will require you to pay over $10000 in tax attorney fees.

Of course, these prices are only averages of the entire US, and prices may vary significantly considering the area you live in. If the cost is too much, it may be better to deal with all tax related matters yourself. But if you find yourself sucked into a legal turmoil, then getting professional help may be worth the cost.