Taxes and Legal Help - When to See a Lawyer
We get calls this time of year from people with anxiety about tax issues that have been dogging them, or ones they fear they will soon be facing, or just questions they need answered in order to sleep well after April 15. So we asked one of our attorneys to give some guidelines about when you need a tax lawyer instead of a CPA. With thanks to attorney Donald Furman, here's some helpful information on the matter.
Q. When is it wise to consult with a tax lawyer?
A. Any time you have a question about income, estate, sales and any other excise taxes and any time the government has questions for you.
Contact a Tax Attorney During and Prior to Preparation of Tax Returns
When an accountant prepares a tax return, it is as if the Internal Revenue Service is doing so (meaning that many tax income and deduction items that could save a taxpayer money but are not clear-cut as to taxability, are reported by the accountant with a bias for the Internal Revenue Service and not the taxpayer). Tax lawyers will treat the very same items with a bias in favor of the taxpayer, not the Internal Revenue Service. Accountants cannot practice law–but tax lawyers have advanced degrees in tax law in particular, as well as their law degrees and licenses, and solid experience in litigation.
Contact a Tax Attorney After filing Tax Returns
- If you are not sure you agree with your accountant.
If an accountant has prepared a tax return and not sufficiently explained taxation of certain items, or, has treated items such that you disagree with the treatment, it is time to receive an opinion from a tax lawyer. Typically changes can be made with an amended tax return as long as it is filed within 3 years of filing the original return.
- If the IRS or Maine State Revenue Service disagrees with what you filed.
If you receive notice from federal or state tax authorities that there is a problem with your return, or that a tax is being assessed for a year in which a tax return was not filed, consult a tax attorney immediately! Getting this handled quickly is important. The law allows taxpayers only a limited period of time to arguer the facts and law regarding tax authority changes. If you wait too long, our opportunity is gone.
- If you receive notice of an audit.
An audit notice typically means that there exists one or more items on a filed tax return that, based on a complex statistical analysis, are not within a federal or state tax authority’s pre-determined “mean.” While a “no change” audit, where the tax authority makes no change to your return at the conclusion of an audit, is infrequent, an audit notice does not mean that the authorities have already decided that your tax return was incorrect. It is like a subpoena–the tax authority is simply requesting proof or supporting documentation for whatever audit items triggered the notice. A tax lawyer can intercede between the taxpayer and the tax authority allowing the client to concentrate on other important matters (functioning in her/his employment or running her/his business).
Contact An Attorney Immediately If Your Account Goes Into Collections!
If you receive a “CP” Letter Notice from the Internal Revenue Service or a “Billing Notice #...” from the State of Maine or other state tax agency it means the argument about whether or what you owe is over, and now the question is when and how you will pay.
Generally, the tax authorities have several years in which to collect the tax debt by any legal means. These means include filing liens against personal property and real estate, seizing the property impressed with a lien, taking some or all of a taxpayer’s wages and other income, and her/his bank accounts, pension accounts, and other retirement accounts, with some exceptions. Seizure/levy notices from most tax authorities are sent “certified mail return receipt requested.” Resolving these issues successfully will require familiarity of the law under some combination of legal areas, such as the laws regarding liens, the mechanics of the registries of deeds, the workings of the secretaries of states offices, and the various uniform commercial codes.
Finally, Contact a Tax Attorney When Your Accountant or Tax Preparer Files an Incorrect Tax Return or Otherwise Acts Improperly
To error is human. Certified public accountants generally have professional liability insurance to pay for their errors. (This may not be the case with non-certified public accountants, enrolled agents, and general tax preparers.) The procurement of liability insurance is an admission that errors, alleged and actual, may occur in the professional practice. If a taxpayer has been economically harmed by an accountant’s error, a tax lawyer should be immediately consulted. In accountant/tax preparer malpractice matters, the time period in which a lawsuit can be commenced to seek recoupment is a major issue. Generally, the lawsuit is an action for breach of contract and for negligence, and the limitation period in most cases is 6 years for a tort (negligence in the preparation of the taxes) and less than that period for breaches of the contract between the client and the accountant.
Tax issues are better headed off and avoided ahead of time than repaired afterwards. Consider consulting a tax attorney for any but the simplest of tax returns–and always as soon as any problem is identified.
For help finding a tax attorney,
Call Lawyer Referral Service at 800-860-1460
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For more information on this matter, and on many other legal topics of interest,
go to the Legal Information page of the MSBA Lawyer Referral Service.
This information is for general use. It is not intended as legal advice.