When to Hire Tax Debt Lawyers?

The requirement to hire tax debt lawyers is imminent if you face serious tax debt issues like IRS resorting to seizing your car or house or sending notices for penalties and interest for failing to pay IRS debt. These are times you should understand that to resolve the situation, negotiations with the IRS for debt settlement may be required, or either you need to appear in tax court or require the intervention of tax court on any new actions initiated by the IRS.

What are serious tax debt issues?

Serious tax debt issues refer to situations where a taxpayer owes a considerable amount of taxes to the IRS and is unable or unwilling to pay. The IRS has been vested with various powers to collect tax debt and deal with various situations.

Here is a list of actions that may be taken by the IRS depending upon the circumstance of the tax debt :

1. Filing a tax lien: The IRS can file a tax lien under IRC section 6321 to secure its claim against a taxpayer’s property. A tax lien is a legal claim against a taxpayer’s property, including real estate, personal property, and financial assets.
2. Issuing a wage garnishment: The IRS can issue a wage garnishment, also known as a wage levy, to collect unpaid taxes from a taxpayer’s wages or salary. The IRS can levy up to 15% of a taxpayer’s disposable income. The IRS can issue a levy under IRC section 6331.
3. Seizing property: The IRS can seize a taxpayer’s property, including bank accounts, vehicles, and real estate, to satisfy a tax debt. The IRS can seize property under IRC section 6331.
4. Revoking passports: The IRS can revoke a taxpayer’s passport if they owe more than $51,000 in delinquent taxes, penalties, and interest. This provision was added under IRC section 7345.
5. Imposing penalties and interest: The IRS can impose penalties and interest on a taxpayer’s unpaid tax debt. The penalties and interest can increase the amount owed significantly over time. The IRS can impose penalties under various IRC sections, including 6651, 6654, and 6662.
6. Initiating a criminal investigation: In rare cases, the IRS can initiate a criminal investigation against a taxpayer for tax evasion or fraud. Tax evasion is a felony offense under IRC section 7201, and tax fraud is a misdemeanor offense under IRC section 7206.

How do tax attorney help with tax debt?

Tax debt attorney can bring a natural relief to individuals who are facing tax debt issues in several ways, including:

1. Negotiating with the IRS on behalf of the taxpayer to settle the tax debt through an Offer in Compromise. This program allows taxpayers to settle their tax debt for less than the full amount owed if they cannot pay the total amount. The IRC section that governs this program in Section 7122. A tax debt attorney can help the taxpayer navigate the application process and negotiate with the IRS to secure an acceptable settlement. See the offer-in-compromise calculator.
2. Negotiating with IRS for an Installment Agreement with IRS as per section 6159 of the IRC, under which taxpayers can pay their tax debt over time in smaller, more manageable payments. A tax debt attorney can help the taxpayer negotiate the terms of the IA with the IRS, ensuring that the terms are affordable and realistic.
3. Taxpayers disputing a tax assessment or proposed tax assessment by the IRS can take their case to the United States Tax Court. A tax debt advocate can represent the taxpayer in court proceedings such as the United States Tax Court, the United States District Court, or the United States Court of Federal Claims.
4. Supporting the Innocent Spouse Relief claim. This program allows taxpayers to seek relief from joint tax liability if they can prove that their spouse was solely responsible for the tax debt. The IRC section that governs this program in Section 6015 of IRC. A tax debt attorney can help taxpayers gather the necessary evidence to support their claim and navigate the application process.
5. Providing legal advice on the taxpayer’s options for resolving their tax debt, such as filing for bankruptcy.

Who is better for tax debt relief? Tax debt lawyers or CPAs

Tax debt lawyers and Certified Public Accountants (CPAs) both have expertise in tax law and can be very good tax debt advisors for individuals facing tax debt issues. However, in my opinion, a tax debt attorney is better suited for tax debt issues that often require court visits or negotiations with IRS. Here are three significant differences in the expertise and approach of both tax professions.

1. Tax debt lawyers have completed law school and passed the bar exam, while CPAs have completed a degree in accounting and passed the CPA exam. Lawyers have a more comprehensive legal education and are trained in legal research, writing, and advocacy. CPAs, on the other hand, are experts in accounting, tax preparation, and financial planning.
2. Tax debt lawyers primarily represent clients in legal matters related to tax debt, such as tax liens, levies, and wage garnishments. They have extensive knowledge of tax laws and legal procedures and can help clients navigate the legal system to resolve their tax debt issues. CPAs, on the other hand, primarily focus on tax preparation, planning, and compliance and may not have the same level of legal expertise.
3. Tax debt lawyers can represent clients in court proceedings and negotiations with the IRS, while CPAs typically cannot. Lawyers can provide legal advice and representation to clients in all legal matters related to tax debt, while CPAs are typically limited to providing tax preparation and planning services.

Overall, a tax debt attorney can bring significant tax debt relief to individuals by helping them navigate the complex, often confusing IRS rules and regulations and working to secure the best possible outcome for their clients.