Spring is here; the birds are chirping, the flowers are blooming, and the weather is becoming slightly drier. But, spring also means April 16, tax day, is coming up. While the most common time to seek a tax attorney’s advice is when the IRS or Department of Revenue (DOR) are sending you notices, beginning collections, or auditing you, there are other times when it makes sense to seek the legal advice of a tax attorney, even if nothing has gone wrong (yet).
For example, consulting with a tax attorney regarding your business can help you discover business deductions that would otherwise go unnoticed. Likewise, there are areas of tax law which have unique tax rules and procedures, such as property tax, nonprofit management, and low-income taxpayer assistance. Property taxes, in particular, are determined based on how much land you have, when it was last assessed, whether it’s due to be assessed again, what the value of other local properties is, as well as many other factors. In the case of nonprofit management, a tax attorney can help a nonprofit organization know what it can and cannot do to maintain its tax exempt status, can help organize and establish a nonprofit organization so as to be in compliance with the rules of the IRS, and can apply for tax-exempt status on the organization’s behalf.
Another area where it is important to consult with a tax attorney is the case of low-income taxpayer assistance. Contrary to what would make the most sense, often the time when you have the least money is the time to seek a tax attorney’s advice. If the IRS or DOR are seeking collections from you, putting liens on your assets, or garnishing your wages, this is the time when you need to learn how to put an end to these collection procedures and how to get yourself out of debt. This can include applying for non-collectible status, preventing the IRS or DOR from continuing to collect due to your low-income, and can go so far as an Offer in Compromise (OIC) in which your attorney negotiates with the IRS to find a way to satisfy your debt for hopefully less than the total sum.
It’s not just these special areas of tax law that can be complex. Income taxes can get confusing, from determining what exactly counts as income (hint: it’s not just the money you earn at your job), to determining who are your dependents and whether they actually qualify as dependents. Alimony payments, gross income from the business you own, or properties you rent are only a few examples that need to be reported as income. IRC § 61 sets out what is considered income, and goes on to state that the examples that are listed are “not limited” the ones that the government can define as income. This means that just reading the law may not be sufficient to truly know what may or may not be considered income. Each income tax assessment varies by the individual and to make sure you are accurately organizing your taxes, discussing your situation with a lawyer will lower the likelihood of an audit later on and it’s good to remember that is certain situations your tax advice fees are deductible.