In life, two things are constant namely taxes and change. In other words, you will pay taxes for as long as you live. Employees pay taxes through their employers. More specifically, companies withhold specified amounts on behalf of their employees and then remit the same to the federal government. Employers also withhold social security and Medicare payments for their employees. However, the Internal Revenue Service (IRS) is keen on payroll taxes because this form of tax accounts for 70% of the revenue it collects.
Currently, unpaid or under-reported payroll taxes total to $72 billion annually. Failing to remit these taxes leads to serious consequences including penalties, fines, and legal action. In fact, ordinary business owners such as plumbers, electricians, restaurant owners, and flooring contractors pay the heaviest price for falling back on their payroll taxes. Here are some strategies for selecting the best tax attorney for small business owners who are facing liens or legal action by the IRS.
– Examine Their Level of Experience
Tax statements are sensitive documents that could affect you in future. Inexperienced lawyers do not appreciate the repercussions of their actions when dealing with your taxes. For example, some of them do not understand the complex nature of programs designed to settle tax disputes. They might settle the dispute when they do not need to do so or they might fail to settle when they should do so. Familiarity with such programs comes with a heightened level of judgment. That means you should hire someone who has years of experience in this industry. You should note that the collection process conducted by the IRS is exhaustive, intrusive, and sensitive. The wrong advice from your lawyers during this process might cost you a lot of money in fines, penalties, and legal fees.
– Make Sure That They Have the Right Kind of Qualifications
Lawyers go through a process of extensive training before they conduct any business on behalf of the public. However, some attorneys meet the basic requirements during these training processes while others excel at them. You should be familiar with the minimum standards for a business tax lawyer so that you do not work with unscrupulous people who have dubious qualifications. For example, tax attorneys should possess an undergraduate degree.
Ideally, this degree should be in business, accounting, finance, economics, or finance. However, it can be in any course. Business tax attorneys should also have a Juris Doctor Degree after completing law school in addition to a licensure from their state bar. More importantly, those dealing with IRS issues specifically should be part of the Enrolled Agents Program at the IRS. A Masters of Law degree is an added advantage that your tax lawyer should possess.
– Scrutinize the Reputation of the Attorney
Lawyers are different and as such, their reputation will differ from person to person based on their approach to cases before them. For example, some attorneys will carry out their duties with care while others will be careless when carrying out theirs. With each case handled, a lawyer either builds his reputation or destroys it. His standing among his peers and clients will tell you a lot about his ethical standards, leadership qualities, integrity, and success rate. Getting this information is easy if you look in the right places. For example, you can contact the bar association in your area to see if the lawyer you would like to hire has disciplinary issues. Look for another attorney if he does. Talking to some of his previous clients or his peers to know what they think about him is another good idea.
– Ask For Referrals from Your Family, Friends, and Colleagues
As mentioned earlier, taxes are constant. That means someone you know went through the same process that you are going through today. Talk to that person and get his take on the issues you are facing. Ask him if he knows a good business tax attorney. This kind of referral matters a lot because it is personal in nature. That means the person he is referring you to is likely to be knowledgeable and trustworthy. Moreover, the tax attorney will pay close attention to your case if someone referred you to him. He will do that because he needs to build a business reputation with you while maintaining the one that he has with the person who sent you to him.
– Choose a Lawyer Who Is a Member of a Professional Institution
Attorneys are members of several bodies including local, state, and federal associations. Some of them encompass all lawyers while others cater to particular groups. For example, you might have an association for female advocates and another one for male attorneys. Choosing a lawyer who belongs to various professional institutions is a good idea. Why is that so? These institutions have exclusive resources on tax law. Your lawyer will also participate in seminars and conferences held by such bodies including ones on tax relief for business owners. He will also hold a respected position in the legal system if he happens to be an official in any of these institutions. These benefits of belonging to such organizations translate into improved representation for you. For instance, he may use the resources provided by such bodies to research on particular aspects of your case such as tax relief for business owners.
– You Have To Consider the Cost of Legal Representation
Hiring a lawyer is expensive. In fact, ordinary business owners such as plumbers, electricians, restaurant owners, and flooring contractors can hardly afford attorneys. Consequently, you have to consider the fees charged by a lawyer before you hire him. Remember, you cannot pay for something that you cannot afford so go for an attorney who charges you a reasonable price for his services. Sometimes, the fees charged by a lawyer do not reflect the quality of his services. For this reason, you should focus on all the other strategies mentioned above before you look at the cost of representation. You might find that a lawyer charges a high fee for his services yet he lacks the attributes you would want in an attorney.
It is important to note that you can prevent an IRS inquiry into your tax affairs. For example, you can deposit your payroll and sales tax immediately if you had failed to do so. The IRS may also send you a notice requesting for payment if you fail to remit the taxes. Honor this notice as soon as it is possible for you to do so. You should note that the IRS penalizes you at the rate of 5% to 25% each month for failing to file Form 941. Eventually, the IRS will place a lien against your properties if you fail to honor your tax obligations and then, it will refer you for prosecution. Business owners should use the strategies mentioned to select a goo tax attorney above if it comes to that. However, hiring a tax lawyer on a regular basis is also a good idea so that you can avoid these kinds of unfortunate situations.Read More