Why Use a Tax Attorney: How They Can Help With the IRS & NYS

Tax issues can cause serious problems. So it’s understandable that the moment you get a letter or notice from the IRS concerning back taxes or another tax concern, you might want to hire a Buffalo NY tax lawyer. In some cases, you should hire a tax attorney. In other cases, you’re just fine handling the issue yourself. In this article, we’ll discuss when and why you should probably hire a tax lawyer, including how much they can cost and what they can do for you. 

Types of Situations Where a Buffalo Tax Attorney Can Help

If you have a problem with the IRS or New York State, a tax attorney can almost always help. The real question is whether asking the attorney for help is worth the cost. That being said, there are several tax issues where hiring tax lawyers is likely worth the price of their legal fees.

Complicated Tax Problems

First, you have a complicated tax problem where you owe (or could owe) $10,000 or more to the IRS. With so much money on the line, having a Buffalo NY tax attorney to handle your case to help you reduce or eliminate your tax liability is often worth the cost.    However, if you only owe a few hundred or a few thousand dollars to the IRS or NYS, then even if the tax lawyer could solve your problem, it might not be economical to hire them to do so. One caveat to this is if you need the peace of mind that comes with hiring a tax lawyer. Perhaps you could do the research and negotiate with the IRS yourself. But knowing an experienced tax professional is handling your case might be worth it if it helps you sleep better at night.

Legal Questions 

Second, your tax problem involves a legal question. For example, there might be uncertainty as to whether your FBAR reporting violation was willful or if the IRS is barred from collecting a debt from you due to the passage of the statute of limitations.   Some legal questions can be answered fairly quickly online with a simple search. But if you’re thinking about hiring an attorney, you’ve likely already done this research and still aren’t sure what the answer is. In this case, it could be worth the time and money to find and hire a tax attorney.

Criminal Tax Concerns 

Third, the IRS (or a state or local taxing authority) believes you may have engaged in tax evasion or fraud. Not only are you looking at the potential for hefty penalties and fines, but also possible jail or prison time. You don’t want to cut any corners or take any shortcuts when trying to defend these types of accusations.

Negotiating with the IRS 

Fourth, you want someone to help you negotiate with the IRS. This is where a Buffalo tax attorney’s skills can really shine. Given their litigation experience and in-depth grasp of tax law, it’s safe to say that they can probably negotiate with the IRS better than you can.   These negotiating skills can be especially useful when trying to reach a settlement for unpaid taxes. A tax lawyer knows what kind of facts and arguments the IRS needs to hear to agree to settle a tax debt for less than what you owe, waive or reduce a penalty, successfully appeal an IRS decision, and/or get you more time to pay off a tax balance. This could include getting the IRS to pause their collections while tax settlement negotiations continue.   If you want your attorney to negotiate with the IRS for you, you’ll have to provide that authorization with a power of attorney. This is most often done with the help of IRS Form 2848, Power of Attorney and Declaration of Representative. The IRS needs this form completed so they can discuss your tax matter with a third party, such as your lawyer, in addition to you.   These are some of the most common reasons why you might want or need to retain the services of a local tax attorney who services Buffalo NY.

 

Other situations where it might be worth hiring a tax lawyer include:  

• 1. Appealing an IRS tax decision. This could include income says you earned, when you didn’t, or a tax position you took on your income tax return that the IRS disagrees with. 
• 2. Petitioning the U.S. Tax Court. 
• 3. Requesting Currently Not Collectible Status
• 4. FBAR and FATCA issues.  FBAR Attorney
• 5. Assisting with an audit. This could include an income tax or sales tax audit. 
• 6. Submitting an offer in compromise
• 7. Applying for a large installment agreement
• 8. Helping with Wage Garnishments  Wage Garnishments
• 9. IRS Audit Reconsiderations Audit Reconsiderations
• 10. Innocent Spouse Relief   Innocent Spouse Attorney

 

IRS Tax Relief Forms: Resources for Taxpayers

The Internal Revenue Service has many different options for people who get behind on their taxes. But to request help, you need to file the right forms. This guide provides an overview of the relief forms you need to file based on the resolution option you want to pursue. Keep in mind that in some cases, you may need to apply for multiple programs.

IRS Penalty Abatement

If you file or pay late, the IRS will assess penalties on your account. To request abatement, you must file Form 843 (Claim for Refund and Request for Abatement). Generally, the IRS will remove penalties if you had reasonable cause such as a serious illness or a death in the family. The agency also waives penalties for first-time offenders which includes anyone who hasn’t had a penalty in the last three years.

Payment Plans

To apply for a monthly payment plan on your back taxes, you need to file Form 9465 (Installment Agreement Request). If you owe less than $50,000, you can file the form or set up a payment plan online, but if you owe that threshold, you must file this form. To set up the payments to come directly out of your bank account, file Form 433-D (Installment Agreement). Or use Form 2159 (Payroll Deduction Agreement) to have the payments come directly from your paycheck. These forms are typically optional if you owe less than $25,000, but if you owe over $25,000 and less than $50,000, you must provide a financial disclosure if you don’t set up direct debits or paycheck deductions. Taxpayers who owe $50,000 or more must make a financial disclosure if they want to set up monthly payments. The IRS generally requires a form from the 433 series such as Form 433-F (Collection Information Statement), Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals), or Form 433-B (Collection Information Statement for Businesses). There is a fee to set up a monthly payment plan on your back taxes. Applying online and setting up direct debits reduces the fee. But you can save even more if you qualify as low-income. To apply, use Form 13844 (Application for Reduced User Fee for Installment Agreement).

Offer in Compromise Tax Relief Forms

An Offer in Compromise is when the IRS lets you pay off your back taxes for less than you owe. To apply, you need Form 656 Booklet (Offer in Compromise). This 32-page booklet contains detailed instructions as well as the following forms:

• Form 656 (Offer in Compromise) — This is the form you use to make your settlement offer and payment terms to the IRS.
• Form 433-A (OIC) — This is the form individuals, and self-employed people use to share their financial information and calculate their offer.
• Form 433-B (OIC) — Businesses use this form to note their financial details and calculate their offer.

Note that the 433 forms listed above are specifically for an offer in compromise. These forms request very similar details as the 433-A and B collection information statements, but they also guide you through the calculations to determine how the equity in your assets affects your tax settlement. You should also use these forms if you want to apply for an offer in compromise based on effective tax administration. Usually, the IRS will only accept your offer if it is the most you can afford to pay, but you may qualify for a lower payment if you prove that forcing you to pay more would be inequitable.

Offer in Compromise — Doubt as to Liability

Doubt as to liability means that there is a legitimate doubt that you owe the full tax bill, and the IRS agrees to settle for less than you owe. To apply for this type of offer in compromise, you should file Form 656-L (Offer in Compromise Doubt as to Liability).

Delay Payment of Taxes

If you cannot pay your taxes due to financial hardship, you can request more time using Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship). This form lets you specify how much time you need, and it allows you to explain why paying the tax due would cause financial hardship.

Hardship or Currently-Not-Collectible Status

The IRS will stop collection actions against you if you qualify for hardship status. There is no form designed just for this purpose, but generally, individuals and businesses file Form 433-A, B, or F (Collection Information Statement). There are links to those forms above.

Help From the Taxpayer Advocates

The Taxpayer Advocate Service is an independent part of the IRS, and they may be able to help if you cannot get a resolution by working through the IRS’s usual channels. They can also help if you’re facing economic hardship due to collection actions such as asset seizures or wage garnishments. To request their help, file Form 911 (Request for Taxpayer Advocate Service Assistance). Don’t file this relief form if you want to make monthly payments or apply for a settlement. Instead, follow the instructions above.

Innocent Spouse Relief

If you believe that your tax liability is due to your spouse’s actions, you may qualify for innocent spouse relief. To determine if you qualify, the IRS considers factors such as why you didn’t know about the tax and if you were coerced into signing the tax return. To apply, use Form 8857 (Request for Innocent Spouse Relief).

Appealing Collection Actions

You have the right to appeal certain collection actions. For instance, you can appeal liens, levies, and garnishments. To request a collection due process hearing, use a Form 12153 (Request for a Collection Due Process or Equivalent Hearing). Otherwise, use Form 9423 (Collection Appeal Request). Generally, you must receive a notice stating your right to appeal if you want a collection due process (CDP) hearing, but you can almost always appeal through the collection appeals program (CAP). CAP gives you a faster decision, but you cannot appeal. In contrast, CDP takes a bit longer, but you have the right to appeal the decision.

Tax Lien Discharge, Subordination, or Withdrawal

To request to have a lien removed from a specific piece of property, use Form 14135 (Application for Certificate of Discharge of Property From Federal Tax Lien). File Form 14134 (Application for Certificate of Subordination of Federal Tax Lien) if you want the IRS to subordinate its lien to another creditor. If you want to request a tax lien withdrawal, file Form 12277 (Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien).

Filing Back Taxes

To file back taxes, you need information about your income, and a tax professional can help you track down the documents you need. However, if an employer, bank, or other payer refuses to give you the documents you need, you can file Form 4852 (Substitute for Form W-2 or Form 1099-R).

Petitioning the U.S. Tax Court

A taxpayer may petition the United States Tax Court (www.ustaxcourt.gov) if they have received a Notice of Deficiency, a Notice of Determination Concerning Collection Action, or a Notice of Determination of Worker Classification from the IRS. Once the IRS issues a Notice of Deficiency, for instance due to an unfiled tax return, the taxpayer only has 90 days to petition the Tax Court. You may also petition the Tax Court if you have filed a claim for innocent spouse relief and six months have passed without receiving a determination letter from the IRS. The Tax Court holds hearings in various major cities on a monthly basis throughout the year (except summer).

Subject to dollar limits, a taxpayer can choose to have their case conducted as either a small tax case or a regular tax case. You must check the appropriate box on Form 2. If you neglect to check a box, your case will be handled as a regular tax case. Small tax cases are handled with less formal procedures than regular tax cases. It is important to note, however, that unlike a regular tax case, the Tax Court’s decision in a small tax case cannot be appealed by the IRS or by the taxpayer.

The time period for the dollar limits for a small tax care vary depending on the type of IRS action you are seeking the United States Tax Court to review, but the magic dollar amount for each is $50,000. For review of a Notice of Deficiency, the amount of the Deficiency cannot exceed $50,000 for any tax year. For review of a Notice of Determination Concerning Collection Action, the total amount of the unpaid tax cannot exceed $50,000 for all tax years combined. For review of a Notice of Determination of Worker Classification, the amount in dispute cannot exceed $50,000 for any calendar quarter. For review of a Notice of Determination concerning innocent spouse relief, the relief sought cannot exceed $50,000 for all years combined.

To ensure that your case will be properly processed without delay, you should enclose a copy of the Notice of Deficiency you received from the IRS, a completed petition with all the necessary forms, located on the Tax Court’s web site (www.ustaxcourt.gov), a completed request for place of trial, as well as the $60 filing fee.

How to Find a Good Buffalo Tax Lawyer 

If you’ve decided it’s time to hire a tax lawyer you might now wonder how you can find the right one for you. There isn’t a set of strategies that will apply to every taxpayer, but here are a few tips that can improve your search process. 

Hire a Local Buffalo Tax Attorney 

Even though much of your communication may be through email or over the phone, it’s convenient to have your attorney close by if you want an in-person meeting or need to send them important documents. Therefore, we will meet you in person if needed.    Another benefit of retaining a Buffalo NY tax lawyer is subject matter knowledge, especially if you have tax questions concerning state or local taxes. If your tax issue is with the IRS, most tax attorneys can take your case no matter where you live. But if you have a state, county, or city-specific issue, then hiring a tax lawyer who works in that state, county, or city is a good idea. The key is to find a tax attorney who has experience handling your particular tax issue. 

Use an Online Search Engine 

Most tax attorneys will have a website, so a good place to start searching for an attorney is to use an online search engine, such as Google, Yahoo!, or Bing. To do a search, type “tax attorney” into the search bar, as well as the tax issue you need help with. If you have a state or local tax issue, put your location in the search bar, too. 

Ask Other People 

A lot of lawyers get new clients through word-of-mouth and tax lawyers are no different. Asking a friend, family member, or co-worker for a recommendation for a good Buffalo tax attorney is also a good idea. If no one you know has a recommendation, you can check with your state or local bar association for the contact information for attorneys who practice tax law. Also, consider looking at reviews submitted by users, but be wary of fake reviews or advertisements designed to look like reviews.

Prepare for the Consultation 

Your first meeting with a tax attorney will almost always begin with an initial free consultation. These initial consultations are important because they offer you the opportunity to get a better understanding of your case and determine if the attorney you’re meeting with will be a good fit for you.   In some cases, what you think is a major tax issue that requires a tax lawyer might be simpler than you thought or require the services of a different tax professional. Alternatively, perhaps the tax attorney can easily handle your tax matter but would charge a fee that makes their services cost-prohibitive.   To make the most of the initial consultation with your tax attorney, you want to be prepared. Bring any documents you have to the meeting (or have them readily available if the consultation is over the phone), as well as write out any questions or concerns you might have. Also, have as much information about your case handy, such as the letter or notice you received, any upcoming deadlines, how much money you’ve already paid in taxes, and the tax agency or department you’re dealing with.   Many Buffalo NY tax attorneys, including Timothy S. Hart, offer free consultations.  Despite being free, you can still learn a lot from the meeting. As helpful as free consultations are, don’t expect a detailed examination and analysis of any documents you bring. A good review of these documents could take a few hours and most free consultations last less than an hour.   Despite this limitation, you can still expect some of your tax questions to be answered. If they can’t be answered during the consultation, the consultation should provide you with enough information to decide if the questions are important enough that it’s worth hiring a tax attorney to find the answers.

How Much Do Tax Attorneys Cost? 

It depends on several variables. These include the tax attorney’s fee structure, the attorney’s level of experience and skill, and the complexity of your tax matter.   Most Buffalo NY tax attorneys will charge either by the hour or a flat fee. A tax lawyer’s hourly rate can vary widely based on their background and training, difficulty level of the tax matter, and geographic location. A good range to expect is anywhere between $200 and $600 per hour. Hourly rates are often used when the exact scope of the tax matter is unknown, and therefore, the attorney isn’t sure how much time they’ll need to spend handling the case.   Flat fees are more common when the attorney can reasonably predict the time and effort they’ll need to spend on your case. Basic cases might have flat fees of a few hundred dollars while more complex (yet predictable) matters could have flat fees of thousands of dollars.    We offer a free consultation to give you a quote of the fee we would charge.   

Hiring a Tax Pro Other Than a Tax Attorney 

You might have a tax issue that requires a professional, but not one that needs a tax attorney. Luckily, there are other options, two of the most common being certified public accountants (CPAs) and enrolled agents (EAs). But how do you know when and if you need an attorney, CPA, or EA? There’s no definitive answer that will apply to all taxpayers in all situations, but as a general rule:  

• Tax attorneys are ideal for complex disagreements with the IRS or other taxing authorities, especially if that disagreement involves a statute or court case.
• CPAs may be better suited for tax questions that are more financial, as opposed to legal, in nature. For example, how to structure a business to reduce its tax liabilities might be perfect for a CPA.
• EAs could be ideal for a relatively straightforward tax matter before the IRS, but the matter has enough complexity that you don’t feel comfortable handling it or don’t have the time to handle it yourself.

  What CPAs and EAs charge can vary widely, but given the greater training needed to become a CPA or attorney, it’s common for EAs to cost less than CPAs and attorneys, all else being equal. 

Think You Might Need the Help of a Tax Attorney?

If you’re confident you need a tax lawyer, the Timothy S. Hart Law Group can help. If you think you might be better off with a CPA, we can still help, as Mr. Hart is also a CPA. If you’re uncertain as to what kind of tax professional you need, you should still get in touch, either by using our online contact form or calling 518-213-3445 (Albany) or 917-382-5142 (New York City). We offer free consultations where we’ll be more than happy to discuss your case and help you decide what your best course of action should be, and we work with clients in the Buffalo area and throughout NYS.