The Importance Of Having A Tax Attorney
The tax code is complex and tax laws regularly change. As a business owner, you are responsible for filing accurate returns, estimating your tax obligation and making quarterly tax payments. In addition, you are required to issue 1099s, W-2s and other information returns. You may also be required to file federal and state unemployment tax returns. The Affordable Care Act added another layer of reporting requirements.
Regardless of who does your taxes, you alone are responsible for any reporting errors. Having a tax attorney to explain your obligations, guide you through the planning process, complete your returns and defend you if you have an IRS tax issue or a problem with your state's Department of Taxation can be invaluable.
Regardless of who does your taxes, you alone are responsible for any reporting errors. Having a tax attorney to explain your obligations, guide you through the planning process, complete your returns and defend you if you have an IRS tax issue or a problem with your state's Department of Taxation can be invaluable.
Do-it-yourself tax returns may cost more in the long run
When your business was fresh and new, filing your taxes may have been simple. With one location and few employees, you may have completed your own returns using software or delegated the task to your bookkeeper. However, as your business grows, so does the complexity of your tax situation.
The most valuable asset your business has is one you won't find on the balance sheet: It is your time, a limited resource. Consider the opportunity cost of dedicating this resource to tax-related issues rather than to running and growing your business. Add to this the possibility of overpaying taxes because you miss new deductions, or the consequences of inadvertently filing an inaccurate return, and the cost of a professional becomes a bargain. The peace of mind that comes from knowing you have a tax lawyer to back you up is another factor to add into the calculation.
When your business was fresh and new, filing your taxes may have been simple. With one location and few employees, you may have completed your own returns using software or delegated the task to your bookkeeper. However, as your business grows, so does the complexity of your tax situation.
The most valuable asset your business has is one you won't find on the balance sheet: It is your time, a limited resource. Consider the opportunity cost of dedicating this resource to tax-related issues rather than to running and growing your business. Add to this the possibility of overpaying taxes because you miss new deductions, or the consequences of inadvertently filing an inaccurate return, and the cost of a professional becomes a bargain. The peace of mind that comes from knowing you have a tax lawyer to back you up is another factor to add into the calculation.
Advantages of a tax attorney over a CPA
While both professionals offer tax advice and help with planning, an attorney is better equipped to defend tax filings. Unlike attorneys, accountants do not have client privilege. Your accountant would be compelled to testify against you in criminal tax cases, other federal investigations and state tax audits.
The relationship between you and your tax attorney is privileged though. You can feel secure that communications with your lawyer are, and will remain, confidential. While you may depend on your CPA to handle your overall finances, a tax attorney is better qualified to handle tax-related legal issues, particularly if you conduct business across state lines or internationally.
While both professionals offer tax advice and help with planning, an attorney is better equipped to defend tax filings. Unlike attorneys, accountants do not have client privilege. Your accountant would be compelled to testify against you in criminal tax cases, other federal investigations and state tax audits.
The relationship between you and your tax attorney is privileged though. You can feel secure that communications with your lawyer are, and will remain, confidential. While you may depend on your CPA to handle your overall finances, a tax attorney is better qualified to handle tax-related legal issues, particularly if you conduct business across state lines or internationally.
Surviving an audit
In 2015, 7 percent of Schedule C businesses with gross receipts less than $100,000 were called in for a field audit. A letter from the IRS requesting you schedule an appointment to discuss your tax return is bound to make anyone anxious. You have the right to representation at your audit and, if your return was completed by a CPA who is an enrolled agent, that professional will be able to help explain your return. However, a tax lawyer is uniquely qualified to deal with any ensuing legal issues and can provide the best support.
If the audit reveals you owe additional taxes to the IRS, a tax attorney can negotiate an IRS tax settlement and assist you with creating a payment plan. Should your case go to court, a tax attorney becomes mandatory.
In 2015, 7 percent of Schedule C businesses with gross receipts less than $100,000 were called in for a field audit. A letter from the IRS requesting you schedule an appointment to discuss your tax return is bound to make anyone anxious. You have the right to representation at your audit and, if your return was completed by a CPA who is an enrolled agent, that professional will be able to help explain your return. However, a tax lawyer is uniquely qualified to deal with any ensuing legal issues and can provide the best support.
If the audit reveals you owe additional taxes to the IRS, a tax attorney can negotiate an IRS tax settlement and assist you with creating a payment plan. Should your case go to court, a tax attorney becomes mandatory.
Gillian Burdett is a freelance writer covering all things home and living. Her work can be found on Examiner.com.
