Trying to navigate the tax legal matters can be overwhelming, especially when faced with IRS issues or tax planning needs. The Internal Revenue Service (IRS) is one of the important divisions of the U.S. Treasury Department government agencies. Their main task is to administer federal tax law and collect federal taxes from tax payers. Since the IRS has so much authority, trying to handle tax issues on your own can backfire and often lead to serious legal or financial trouble.
But having a tax attorney on your side can make a big difference. They serve as your legal advocate and shield when it comes to tax matters, protecting your rights and financial interests. With their help, you can get a better outcome, like lowering what you owe or avoiding extra penalties. However, many people are unsure about when they need one and what costs to expect.
In this guide, we'll break down everything you need to know about tax attorneys by explaining their role, when to hire one, and typical costs, so you can make well-informed decisions about legal representation for your tax matters.
Key Takeaways
- Tax attorneys charge from $200 to $500 per hour, depending on location and case complexity.
- They can negotiate with the IRS on your behalf, often leading to better outcomes.
- CPAs and EAs can handle basic tax prep, but they can’t offer legal advice or represent you in court.
- If you're facing legal issues or high-stakes tax matters, hiring a tax attorney is worth the investment.
What Is a Tax Attorney?
A tax attorney is a licensed legal professional who specializes in tax law and provides guidance on complex tax issues. They have extensive knowledge of federal and state tax codes, regulations and procedures. With their expertise, they can help you understand your options, recommend the best course of action and represent you in front of the IRS or in tax court if needed.
To become a tax attorney, one must graduate from law school, pass the state bar exam, and obtain a license to practice law. Many tax attorneys also have additional training or degrees in taxation, giving them a strong foundation to handle everything from tax audits and legal disputes.
Role & Responsibilities
What can a tax attorney do for you? A lot more than you might think. Here’s how they can help:
- Represent you during IRS audits or investigations
- Negotiate tax debt settlements and set up payment plans
- Help with estate planning and minimizing estate taxes
- Structure business deals to avoid tax issues
- Assist with international tax matters
- Defend you in tax court
- File legal appeals against IRS decisions
- Advise on tax implications of divorce or inheritance
- Provide advice on tax implications of business transactions
- Deal with an audit, including appealing the result of an audit.
- Handle IRS collection like wage garnishments, liens, and levies
- File or amend past-due tax returns
If your tax issue goes beyond basic filing or accounting, a tax attorney can protect your interests and help you resolve tax issues that a CPA or enrolled agent can’t.
Tax Attorney Rates
Tax attorney fees in the United States vary greatly based on factors such as geographic location, the attorney's experience, and the complexity of the services needed.
While hourly rates can vary and may change over time, here’s a general overview of what tax attorneys typically charge in different states to give you an idea of what to expect.
Today, the latest average rate for a tax attorney across the United States ranges from $200 to $500 per hour, with rates in metropolitan areas often higher than in smaller cities or rural areas.
Common Cost of Tax Attorney Services
Here’s a quick look at what you might pay for specific legal tax services:
- Initial Consultation: Free - $300
- Installment Agreements: $1,500 - $3,500
- Offer in Compromise: $3,000 - $6,000
- IRS Audit (simple): $2,000 - $3,500
- IRS Audit (complex): $5,000 +
- IRS Appeals: $5,000 - $7,500
- Tax Debt Resolution $2,000 - $5,000
- Penalty Abatement: $1,500 - $3,000
- Tax Court Litigation: $10,000 +
Keep in mind that these rates are just averages. The actual cost can be higher or lower depending on several factors, like how complex your case is, the attorney’s experience, and where you're located.
Tax Attorney’s Fee Structures
To choose the most cost-effective option for your legal needs, it's important to understand the common billing methods that tax attorneys use.
Hourly Rates
Tax attorneys most commonly bill their clients by the hour. With hourly billing, this means you're charged for the actual time an attorney spends working on your case, including consultations, legal research, document preparation, and court representation. Typical hourly rates for tax attorneys range from $200 to $500.
- Best for: Complex cases requiring ongoing legal assistance.
- Potential downside: Costs can add up quickly and total expenses are hard to predict.
Flat Fee Services
Some tax attorneys use a flat fee structure for simple legal tasks. Flat fees are a set amount charged for specific services, regardless of how much time the attorney spends on the case. This pricing model is predictable and it usually starts at $750. Examples of services with flat fees include preparing an offer in compromise which can range from $3,000 and $6,000 and preparing legal documents, often charged between $2,000 and $4,000.
- Best for: Complex cases requiring ongoing legal assistance.
- Potential downside: Costs can add up quickly and total expenses are hard to predict.
Retainer Agreements
Some tax attorneys work on a retainer basis, where you essentially prepay for their services. You pay a lump sum upfront, and the attorney draws from it as they work on your case. This is a common arrangement for complex cases or those expected to take a long time to resolve.
- Best for: Ongoing tax issues or businesses needing regular tax counsel.
- Potential downside: Requires large upfront payment.
Which fee structure is right for you?
The best fee structure depends on your situation. Familiarizing yourself with these billing methods can help you with financial planning and avoid surprises in the future. For simple, well-defined tasks, a flat fee provides cost certainty. For complex issues with unknown scope, hourly billing might be better, even though the final cost is less predictable.
Always discuss fee structures upfront with any tax attorney you're considering, and get the agreement in writing before moving forward.
When Do I Hire a Tax Attorney?
You might be shocked by the cost of hiring a tax attorney, but often, their expertise makes them well worth the investment. It’s natural to feel hesitant since this is a big decision that requires careful thought. To help you decide, here are situations where hiring a tax attorney is usually worth the cost:
You're Facing an IRS Tax Audit
While simple audits can be handled by a CPA, complex audits related to business income, rental properties, or large deductions can have greater benefit from attorney representation. If the IRS is questioning the legality of any of your tax positions, an attorney is necessary because they understand your rights and the best practices for staying compliant throughout the process.
You're Dealing with a Large Tax Debt
If you owe more than $10,000 in taxes and need to negotiate a payment plan or settlement, a tax lawyer can help you understand the legal steps the IRS will take to collect what you owe. They can often help you secure better terms than you could on your own.
You're Dealing with Tax Fraud or Criminal Charges
If the IRS suspects fraud or criminal activity, you need legal representation immediately, as you could face civil penalties and even criminal charges. Communications with your attorney are protected by attorney-client privilege, which doesn't extend to accountants or tax preparers.
You Need to Go to Tax Court
Tax law is complicated, and representing yourself in tax court is risky. Attorneys are experts in understanding procedural rules and building effective arguments based on tax law to help you with your case.
You Have Complex Estate or Business Tax Planning Needs
For high-net-worth individuals or business owners with complex tax situations, hiring a tax lawyer to handle tax planning can save you money in the long run. Many businesses have complicated tax processes and obligations, and hiring an attorney ensures you're complying with the law to avoid penalties.
You Have International Tax Issues
For businesses and individuals with foreign accounts, income from overseas, or expatriate tax situations, a tax lawyer can help you navigate complex regulations and understand the legal implications based on jurisdiction.
Can Tax Attorneys Negotiate With the IRS?
Yes, tax attorneys are often very effective at negotiating with the IRS on your behalf, something the average taxpayer may struggle with due to the complexity of tax laws.
Under Internal Revenue Code Section 7421(b)(2), the IRS is required to stop directly contacting taxpayers if they express a preference to consult with a tax attorney, CPA, or enrolled agent.
This provision ensures that taxpayers, who are often at a disadvantage in tax negotiations, can seek legal counsel. Tax attorneys understand IRS procedures and what arguments are most likely to succeed in negotiations. They know how to present your financial situation in the most favorable way while being truthful, which can improve your chances of a successful resolution.
Does Hiring an Attorney Guarantee Success in an IRS Case?
Hiring a tax attorney doesn't guarantee success, but it greatly increases your chances of a great outcome because of their skills and experience. Their value is especially clear in complex situations where large sums of money are involved or when you're facing potential penalties. Tax attorneys are equipped to navigate intricate tax issues that can make a significant difference in your case.
Do I Need: Tax Attorney, CPA, or Enrolled Agent?
Each of these professionals serves different needs, and while some can offer services that are more affordable, the key difference lies in the outcome they can help you achieve.
Certified Public Accountant (CPA): CPAs can assist with tax preparation, financial audits, and general accounting advice. They have a broad understanding of tax procedures but often have limited experience with tax controversy or legal procedures related to taxes, so they cannot give legal advice for taxes.
Enrolled Agent (EA): EAs are licensed by the IRS to handle routine tax preparation and represent taxpayers before the IRS in simpler matters like collections, appeals, and audits. However, EAs are not attorneys and they cannot provide legal advice or represent clients in legal proceedings.
Tax Attorney: Tax attorneys specialize in legal matters and provide representation in tax court against the IRS. They are tax legal professionals that can handle complex tax issues, offer legal tax planning, and provide expert guidance on legal procedures.
For routine tax matters or basic accounting needs, a CPA or EA may be a better choice, though their costs can sometimes rival those of tax attorneys. For more complex tax issues, a combination of both a tax attorney and remote attorney can offer a powerful team to navigate legal and tax matters, so you're supported every step of the way.
Is It Worth it to Hire a Tax Attorney?
The value of hiring a tax attorney depends on your current situation. If you're facing legal issues or high-stakes tax issues, then yes — hiring an attorney is absolutely worth it. Tax attorneys have a deep understanding of tax law, and their guidance can help protect your rights, prevent costly mistakes, and often save you more money than their fees.
Evaluate your level of need. For instance, if the IRS starts taking action on your taxes, it’s critical to act fast. Having an attorney on your side can give you peace of mind and increase your chances of a good outcome. In such cases, paying for a tax lawyer is more likely to be worth the investment.
For law firms looking to strengthen their practice, Remote Attorneys offer access to experienced tax lawyers who provide legal services at competitive rates, all without the overhead of an in-house hire. Our platform makes it easy to browse attorney profiles, review credentials, and directly consult with professionals who fit your needs. Simply sign up for free, and experience a transformation in how your practice handles tax matters.
Frequently Asked Questions
Can Tax Attorneys Help With an Audit?
Yes, tax attorneys can represent you during an audit. They communicate with the IRS on your behalf, present documentation , challenge improper findings, and negotiate settlements. For situations having complex audits, having an attorney involved often leads to a better outcome.
Can I Deduct Legal Fees on My Taxes?
Legal fees related to your business, including rental properties, are generally tax deductible. However, personal legal fees are no longer deductible due to changes made by the 2017 Tax Cuts and Jobs Act.
How do I find a tax attorney near me?
Start by checking with your state's Bar Association for licensed attorneys with tax specialization. You can also ask financial advisors, CPAs, or friends for recommendations. Be sure to review online profiles and verify credentials carefully.
For added convenience and often better rates, consider Remote Attorneys. Our platform allows you to browse top tax attorneys from different countries. You can review their credentials, experience, and consult with them directly, without geographic limitations.
Can I negotiate the rate of a tax attorney?
Yes, many attorneys are open to flexible payment options, especially for big or long-term legal cases. Don't hesitate to ask about their payment plans, flat fees, or discounted rates. Be transparent about your budget concerns, as many attorneys are willing to work with clients to find mutually acceptable fee arrangements.
