Why You Need a Tax Lawyer

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Taxes are expensive. This statement holds true in more than one sense. On the one hand: it is, quite simply, always somewhat painful to hand over hard-earned money to state and federal authorities. But that is a fact of life and government, and one we can easily come to terms with. Taxes are expensive in a more insidious way as well: it takes up time, expertise, effort, and strategic mistakes can cost you a fortune in missed tax opportunities or even penalties.

That is why you need a tax lawyer: to keep your tax affairs simple and seamless for you. To free up your time, your effort, and your planning for more important things.

Different Tax Professionals and their Expertise

There are some tax functions that can be fulfilled by persons other than tax lawyers. Simply filling in IRS forms can easily be done by yourself or any member of your team tasked with administrative functions. Similarly, with the right software, bookkeeping and other recordkeeping functions can be performed in-house or by various specialized outsourcing tools.

For everything else, you will need professionals. In this regard, there are many benefits to hiring a Certified Public Accountant (CPA) or accountant. CPAs and accountants are specialized to manage your finances and fill in your tax returns. They can provide valuable tax planning support and insight into the tax implications of important business decisions. CPAs can also assist your business in defending itself in tax disputes with the IRS.

However, a tax lawyer offers a few unique benefits.

The Role Of A Tax Lawyer

A tax lawyer is, first and foremost, a professional lawyer. This means that he or she has a Juris Doctor degree, is admitted to the bar, and therefore able to represent you in court. In addition to this, he or she will have a specialized qualification in tax law (and income tax law as part of that). This usually takes the form of a Master of Laws degree (LL.M).

There are a few unique advantages that flow from this combination of legal expertise and tax knowledge. Firstly, you always have the benefit of attorney-client privilege when dealing with a tax attorney. By contrast, a CPA only offers attorney-client privilege if acting at the direction of a lawyer to give the client information relevant to the case.

Secondly, a tax lawyer is able to represent you in court, and is therefore familiar with the rules of civil procedure and the procedural rules of tax court. This not only means that you have professional representation when needed. This also means that a tax lawyer will be familiar with the ways in which litigation can be avoided, minimized, and settled.

Finally, a tax lawyer’s legal expertise makes it possible for them to offer broad tax strategy support in negotiating contracts, setting up a business structure, issuing equity, and a myriad of other business activities that pertain to commercial and contract law. In short: if you want to optimize all your business operations to align with a high-level tax strategy, you need a tax lawyer on your side.

Regardless of which professionals you entrust with your tax issues, however, it is almost always better to employ a specialist than to attempt it yourself.

Why You Need A Dedicated Specialist Dealing With Tax Issues

Why not just handle taxes yourself? There are several reasons, many of them related to opportunity cost and the efficient allocation of resources.

Time. The time you spend dealing with tax issues, and learning about tax issues, can be spent in more profitable ways.
Accuracy. You can’t afford to learn about tax obligations and record keeping requirements on the job. These are things that you need to get right from day one.
Strategic decisions. You need to decide on your tax year, on how to structure deals and income, how to issue equity, how to depreciate assets and when to sell or buy them… the list goes on. All of these decisions should be made with a tax strategy in mind.
Legal developments. Tax laws change. Often. Not staying on top of the latest developments can lead to you missing an opportunity, or even worse: not honoring an obligation. Since ignorance is no excuse in tax court, it make sense to have someone else do the work of keeping up to date on everything, so you can rest easy.

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