Tax Law Guide

Over a hundred years ago, Oliver Wendell Holmes said something like this, “Taxes are the price we pay for a civilized society”. And that’s very true. After all, taxes pay for schools, road, police, fire fighters, parks, bridges and much more.

Think of taxes as the membership fee for living in the United States. We all have an obligation to pay our fair share of taxes; however, there is absolutely no obligation to pay more than that fair share.

If the IRS, state, or local taxing authority knocks on your door or if you are wondering whether you are paying too much in taxes, consult with a tax attorney and he or she can give you specific guidance as to how the law applies to your individual case.

In addition, if your estate plan is more than three to five years old or your life and/or business have changed significantly since you engaged in estate planning, then it’s time to update your estate plan as well. Be sure to consult with a qualified estate planning attorney, licensed in your state.

Common Tax Issues

Tax issues arise when:

• You earn money (income taxes, payroll taxes, and self-employment taxes)
• Your money earns money (capital gains taxes)
• You spend money (sales taxes)
• You own or transfer real estate (real estate taxes)
• You give money away (gift taxes and charitable planning)
• You run a business (business related taxes)
• You die (estate taxes, inheritance taxes, and generation skipping taxes)

The tax code has thousands upon thousands of pages, and we try our best to provide foundational information on common tax issues. Feel free to use our tax glossary if you are unfamiliar with any tax definitions.

Examples of Tax Attorney Cases

• Lila wants to start an import export business and needs to know which business entity to choose as well as how to deal with the taxing authorities of other countries.
• Frederic is considering renouncing his American citizenship to avoid U.S. taxes. He needs to know the pros and cons of giving up his citizenship.
• Penelope and Stan have a $5 million estate and want to avoid a potential $2 million federal estate tax. They want most of their assets to go to the surviving spouse and then their children, though they do have charitable goals as well.
• Peter hasn’t paid taxes in 5 years and wants to know how to deal with that “hiccup”.
• Roger, a professional poker player, is being investigated for tax evasion. He wants a knowledgeable tax attorney on his side even before he’s charged.
• The IRS says Ricardo owes $100,000 in back taxes. Ricardo wants to know how low the IRS will go in a compromise.
• Donald’s house was reassessed and he wants to appeal the reassessment.
• The IRS says that all the assets in the Jeremy Family Trust are taxable because of improper wording of the trust document. The Jeremy family needs a tax attorney to analyze the trust and defend their position that all family trust assets are free of the federal estate tax.
• Todd’s IT business is being audited.
• Barnaby wonders if his sheet metal business is paying the right amount in federal taxes.
• Jane and Malcolm started a real estate business this year; they no longer feel they should be doing their own taxes.

If you’re still unsure whether your case needs a tax attorney, it’s perfectly acceptable to contact the tax attorney of your choice and ask.

How to Find and Select a Tax Attorney

First, you need to determine that you actually need an attorney who focuses her practice on tax law.

Tax lawyers often handle these situations:

• Tax planning to minimize taxes paid.
• Criminal defense against tax evasion and tax fraud charges.
• Resolving wage garnishments.
• Resolving levies against property and wages.
• Filing for stay of collections.
• Amending past tax returns to correct a mistake.
• Preparing tax returns.
• Filing missing tax returns.
• Filing for an offer in compromise.
• Remove IRS levies on accounts receivable.
• Settling business payroll tax controversies.
• Filing a penalty abatement petition.

Second, create an initial list of tax attorneys:

• Ask a friend for a referral.
• Call the bar association and ask for the list of tax attorneys.
• Use the Internet, www.attorneys.org, which is a free – no obligation – private – attorney finder website.

Third, select a tax attorney who:

• Has time for your case
• Is a good communicator
• Makes you feel comfortable.

It’s perfectly acceptable to chat with several attorneys and then select the one you think is the best fit.

A Quick Start Guide to Working with Your Tax Attorney

The time you take to think through your questions, concerns, and goals – and to collect financial documentation – will come back to you tenfold. For example, for tax deductions, each receipt you produce saves you actual dollars.

• Collect all correspondence from the IRS, your state department of revenue, or your local taxing authority. Your attorney needs to fully understand the issue directly from the source.
• Collect documentation of all business expenses and income. Record keeping is not fun for anyone. However, the better records you keep, the more accurate your taxes will be.
• Collect documentation of all charitable contributions and any other deductions. A $100 donation means about $33 in your pocket; a $1,000 donation means about $333 in your pocket.
• Jot down your questions, concerns, and goals. You’ll sleep better at night when you have your questions answered and you know a professional is on your side. Plus, your attorney can only meet your goals if she knows about them.
• Make notes of all communications with your tax attorney and keep all correspondence so you remember what your attorney tells you to do – and not do. No one can remember everything and your cooperation is very important to your case.
• Be prepared to follow your tax attorney’s advice explicitly. There may be hoops to jump through to save taxes or keep you from being assessed interest and penalties or sent to jail; even if some action seems silly or unimportant, do it.
• Disclose everything to your lawyer – even disclose facts that may make you look bad. Your attorney won’t be shocked or think badly of you; however, she does need to know everything to be able to help you effectively.

Best of luck with your tax planning or tax case. We know it’s not fun to deal with taxes, but if you choose to work with a tax attorney, you’ll likely have better results than if you try to go it alone.