The Internal Revenue Service’s, the New York State Tax Department and the NYC Department of Finance tax systems are very complicated and large, especially for those taxpayers who are filing their tax returns for the first time or who don’t have enough knowledge, understanding, and experience in dealing with the IRS, NYS Tax Department or NYC Finance Department with tax matters when they have a tax problem. These are all very large organizations, and they are very difficult to work with for the average person so a NYC Tax Attorney can be a useful resource. The taxation laws are also very complex. A tax lawyer has the training and experience to obtain favorable results in a timely fashion. Without professional assistance of a tax advisor, most people with complicated tax problems cannot successfully resolve their tax issues due to the complexity involved and the size of these governmental institutions. That’s why its best to approach a tax professional and a trusted tax law firm for successfully dealing with your matters when they are significant.
In this blog article, we are going to discuss when are the situations when you should approach a tax attorney and ask him/her for professional assistance instead of trying to resolve the issue by yourself without the necessary experience. That said, if you have a small tax issue, it might to best to try to resolve on your own if you have enough time to get up to speed on what needs to be done from a procedural perspective and the tax law involved. Let’s take a look at a few of the typical situations of when hiring an expert makes the most sense.
A Few Examples of Tax Situations When You Should Approach an Expert
Generally, some taxpayers try to resolve their IRS tax issues by themselves to save the expense of hiring a tax professional. This can be a good idea or a costly mistake. It may be a good idea when you have enough knowledge of the law involved, and a understanding of the procedure involved, and some experience in dealing with tax or business matters, and the tax matter at hand is not overly complicated and the amount at stake is low. That said, from my experience its almost always better to hire a lawyer to represent you since they have an impartial unemotional perspective on the situation, and that perspective is very valuable. Obviously, it is not a good idea if you have only a basic knowledge and understanding of the tax issue to represent yourself, since you do not know what options you have to solve the problem. In cases where the issue is complex, or you lack the time or skill to research and resolve it yourself, you will face a difficult time trying to fix the problem.
The other important aspect of being represented by a lawyer is that you enjoy the benefits of an attorney client relationship. This is very important in cases involving tax disputes. In this relationship, the conversations you have with your tax lawyer are confidential and the attorney can’t testify against you in court. This is especially important where the case involves criminal or civil tax litigation. Your tax counsel and you will be able to have frank conversations of the tax situation you face and he or she will help support you to make the best decisions. The legal issue you face is important and you want to handle it in a professional manner to get the best outcome.
You also should not be completely intimated by the situation, and understand it is okay to ask for help and in some ways it is not different that when you ask a plumber to help with a plumbing issue since you are just buying a persons time and expertise in tax law. So, it is almost always better to get professional assistance from a trusted and licensed tax firm that is located in New York State than to try to solve the problem your self. Most firms offer free consultations so you can get a better idea of how the firm can assist you. Here are specific examples of when you should approach a tax lawyer:
When You Have to File Your Tax Returns
Filing tax returns is a hectic and lengthy process and you need to understand the tax rules involved. In New York State, since there is an income tax, you may have to file income tax returns, and if you own a business, sales tax returns, and payroll returns to name just a few. If you do it yourself, you will have to compromise that effort to file correctly with business obligations. You will have to shift your focus from managing your business and performing daily operations to completing all the formalities of the tax filing procedures. Of course, you will never want this as it may lead your business performance being compromised. Even I hire an outside payroll company to file our payroll tax forms.
Needing to get outside tax help is especially important when you have past due tax returns, and are concerned that the tax authorities may think you are committing tax fraud by not filing. There are also tax planning opportunities that you may be missing out on by not filing, or missing tax refunds. In many cases there are certain tax elections that need to be made with timely filed returns. A tax consultant may be able to assist you in getting caught up with your tax returns and not face harsh penalties or losing out on the benefits of missed tax elections. Hiring a tax professional is also very helpful when you have unfiled international tax returns (FBAR filings) where the penalties are very high when you fail to file or file late. Therefore, for many reasons, either during tax season or during any time of the year, when you have to file your returns to the IRS, New York State Tax Department, or NYC Finance Department and you sense that you have a complex tax situation, since you either have past due tax returns or a complex return, then it would be a good idea to approach a professional NYC tax attorney who handles tax controversy cases to assist you. These cases can include such topics as past due tax returns, improper assessments, large unpaid tax balances, unfiled tax returns, a tax crime, and tax investigation.
When You Don’t Have Enough Knowledge and Experience in Dealing with The Tax Matters
As we mentioned earlier, it is not a good idea to file your returns and deal with other tax matters by yourself when you don’t have enough knowledge and experience to handle the issue correctly since you may be not taking advantage of the taxation laws to minimize the amount owed. For instance, I often hear from potential clients that they spoke to numerous tax experts about their problem and no one mentioned to them that they should file a voluntary disclosure with either the federal, state of city tax authorities and be able to file or correct a tax problem without being penalized. This is extremely important since in many cases the tax penalties can be as much as 50% of the tax assessment. I have had financial professionals tell me that there is no way a tax debt should triple in 10 years, but often I see that in real life so it is very important to try to lower the penalties charged to make the tax repayment affordable. If you do handle the case on your own, you may make several mistakes and miss important formalities that can result in putting yourself in larger financial trouble since your not familiar with the taxation rules related to voluntary disclosures. So, in this type of situation, you must approach a lawyer for professional advice and assistance and if available a NYC tax attorney.
When You Fail to File Your Returns
If you fail to file your by the annual tax deadline, there could be many negative consequences under the current tax law. Those can be harsh for you both financially and even more important emotionally since you will suffer from the stress of owing a large balance without a good plan on how to pay the tax balance owed. That is where a tax attorney comes into play. To smartly deal with unfiled returns, a past due balances, and failure-to-deposit all estimated payments, you should look for unfiled taxes help . A professional NYC tax attorney can help you with this. He/she will understand your tax matter and provide you with a legal solution that can benefit you. You can also hire him or her to represent your case on your behalf so you do not need to speak directly to the tax authorities and you can concentrate more on your business and personal well being. Typically, the reason for past due or unfiled tax returns is that the taxpayer did not have the financial means to pay the taxes owed on the tax returns. A tax professional tax assist with tax payment plans, and tax settlements that you will help put the issue behind you and provide the comfort of having a tax advisor on your side throughout the whole process. The various tax departments can be very intimating, and having a resource with experience dealing with them can be invaluable since your representative will make sure you are not taken advantage of and your rights protected.
When You Want to Settle Your Tax Debts
If you are a tax debtor and want to settle your tax debts with the Internal Revenue Service, or state or city tax authority, there are some specific provisions in the tax law that enable you to have a better outcome. For instance, such techniques as as an Offer in Compromise and part pay Installment Agreements allow you to pay less than the overall amount of the debt. You can apply for these provisions to get some relief from your tax debts. However, to apply for these provisions, you must meet the eligibility criteria and the application process is very complex and takes time and expertise to do correctly. If you apply for tax debt settlement, you need to be extra careful because a single mathematical error and wrong information can cause the rejection of your application. It takes professional judgement and practical experience to get the most out of these programs. To increase the likelihood the IRS or NYS Tax Department accepts your tax debts settlement application, you should hire a trusted lawyer for this type of tax cases if the tax debt is larger than $25,000. If the amount is smaller than this, (i.e. less than $25,000) the taxpayer can often file on their own since the issues and tax law will be less complex.
When You Are Notified For a Tax Audit By The IRS, or by the State of New York
The Internal Revenue Service, and the New York State Tax Department, can notify you within the statute of limitations that they want to conduct a tax review of your filed or even unfiled tax return. In this instance, it is not necessary that you are guilty of a tax law crime, since both the IRS and New York State tax department follows a particular system of selecting the individuals and businesses that will go through the tax process. So, if you are basically honest with the IRS or the State, you need not worry. But it will be a lot of work to go through the process. You will have to prepare all your account books and records so that you can explain every single detail to the reviewer of your tax form. Most clients do not understand the level of detail there financial transaction will be reviewed, and in some ways the best guidance you can receive from a tax expert is to over prepare and have all your details in order. As an example, if you have a list of expenses and receipts from a business trip, it is not good enough to give all the documents to the auditor. You must organize the documents and provide the auditor with details summations of the data, with totals for each expense category. Here you will often need professional assistance from a tax attorney and tax law firm since being unprepared for the review can result in a large tax assessment. They will also help you smartly handle the situation when you do not have all the needed tax documents and try to negotiate a reasonable approach in proving the expense was actually incurred. When you have a tax dispute, a tax professional such as a NYC tax attorney are best trained to assist with the tax audit itself, and then a tax payment plan if needed. If a tax appeal is needed, a tax lawyer handling your case from the beginning will produce a better result than if they need to get involved with the case right before the appeal of an unfavorable ruling.
When You Want to Reduce Penalties and Interest Rate on Your Tax Debts
As mentioned above, when you have a tax problem the problem is magnified due to the penalties assessed and a NYC tax attorney can be helpful. Neither the IRS, or State wants to act as a bank and finance the tax debt that has been incurred. As a way to discourage people from owing them, they charge very high charges (and interest) when you owe them money. In some cases, the reason you owe them was beyond your control. This is called that you have “reasonable cause” for the tax balance being owed, or unfiled tax returns past due. The best example of reasonable cause would be if you were in the hospital, or were otherwise unable to deal with the issue and that is why the taxes are unpaid or the tax return was not filed. If you have reasonable cause, the penalties for the failure-to-file your returns, the failure-to-pay all taxes, and/or the failure-to-deposit all estimated payments, can be reduced and in some cases, like sales tax cases, the interest rate on your tax debts can be reduced, by showing that you acted in a prudent fashion and the reason for the problem was beyond your control and that you want to correct it. However, when you request relaxation of fees charged (and interest rate in some cases), known as penalty abatement, you will often need professional assistance from a tax law expert to obtain the best chance of success.
These are some most common situations when you will need legal advice and help from a tax professional. So, whenever you find yourself in this situations, feel confident that approaching a trusted tax attorney at a law office to get professional assistance to solve your tax problems will produce the best outcome. Often they offer a free consultation, so there is often nothing to lose.
Attorney Timothy Hart
Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]