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Tax Relief: Need a Tax Attorney?

Updated on October 29, 2011

How can a tax relief attorney provide tax help?

You’ve probably seen commercials on television about tax relief as well as for a tax relief attorney or two. Many of these depict people saying something like, “I owed the IRS $20,000, but with help from my tax attorney, I only had to pay $8,000 to settle my tax debt!” You’ve seen these, right? You might be wondering if they’re legitimate, and if the claims made in the commercials are for real. Are tax relief attorneys in the same class as “ambulance chasers,” or are they reputable? And are they worth the fees they charge? How do you find a reputable tax relief attorney? The following information will give you a general overview of the IRS's power, along with ways in which a tax relief attorney might be able to help.

A tax relief attorney can save you a significant amount of money.
A tax relief attorney can save you a significant amount of money.

What is a tax relief?

IRS tax relief is when part of the taxes you owe the IRS are forgiven. In some cases of tax relief, your back taxes might never have to be repaid, depending on your individual circumstances. A good tax attorney will investigate all your options and share them with you. Together, you can decide your best plan of action in dealing with back taxes and audits.

What is a tax attorney?

A tax attorney or a tax relief attorney is a lawyer who specializes in tax codes and laws of taxation, especially those involving the IRS. A tax attorney should be well versed in taxpayers’ rights and the ever-changing tax laws, which is no small feat. A tax relief lawyer is often hired by individuals or businesses with tax problems, including IRS audits, back taxes, bank levies, wage garnishments, and property liens and seizures. Anyone needing tax relief can employ the services of such attorneys.

What can the IRS do?

The IRS has an amazing amount of power. If you owe unpaid back taxes and ignore the calls and letters from the IRS, they can issue a bank levy. Before doing so, you’ll get a letter that states that they are planning to use other methods for tax collection, and these "remedies" might include a bank levy. How does this work? Your bank or banks will be notified by the IRS to seize your accounts and turn them over to the IRS, and your bank is bound by law to comply.

Levies don’t always stop with your bank. Just about any other money you have can be subjected to a levy, too. If you have funds in an escrow account or with a stock broker, they can be seized by the IRS. They can even get the deposit you placed with your power company.

The IRS can also garnish your wages. With a wage garnishment, the IRS will send a notice to your employer, instructing him to withhold a percentage of your salary or wages and send them to the IRS. You’ll be left with very little of your usual earnings, and needless to say, most employers frown upon employees whose wages are garnished.

The self-employed can’t escape this, either. If you’re self-employed, you’re your own boss, so obviously, you aren’t going to garnish your own earnings. What the IRS will do in this case is to contact people who owe you money, instructing them to send those funds to the IRS instead of paying them to you.

Think your Social Security check is safe from an IRS garnishment? Think again. If you owe back taxes and haven’t made a satisfactory payment agreement with the IRS, your Social Security benefit will be subject to garnishment. Up to 15% of your monthly check can be paid to the IRS until the tax liability is satisfied or until the statute of limitations – ten years – expires. If the IRS issues a Manual Levy, more than 15% of your Social Security wages – up to 100% - can be seized, according to section 6331(a) of the Internal Revenue Code. If this happens, you can claim an exemption against the levy. The amount for a single taxpayer is $779.17. If your monthly Social Security check is more, the IRS can take anything over the stated amount with a Manual Levy for back taxes.

Can the IRS seize your home? Yes, the IRS can seize your home or any other physical asset you own in order to pay back taxes. Unless you have at least 20% equity in your home, however, the IRS will avoid this difficult procedure. The IRS usually values property at 20% below fair market value, which plays in your favor. For example, if your home is worth $200,000, the IRS will assign a value of $160,000. If the mortgage owed on the house is $150,000, chances that the IRS would seize your home in such a case are almost nil. If your mortgage existed before the IRS lien, it will have priority over the tax lien.

If you own your home free and clear, or if you have only a small mortgage, the IRS can take your house. This is extremely rare, however. The IRS is often reluctant to seize a primary residence because federal laws make it difficult to do so. Second homes, vacation homes, and rental properties, however, are much easier to seize for back taxes purposes.

In rare instances, the IRS can even seize your business for tax liability. Before doing so, the agency will have to get a writ from a federal judge, and every article in the business must be inventoried. If a sale is conducted, all of these articles must be auctioned off. All of this requires a lot of time and effort for the IRS, so it’s seldom done. Of course, that doesn't mean it can't or won't be done. The Internal Revenue Service is serious about back taxes!

In view of the expansive power of the IRS, tax relief attorneys are definitely worth the cost. A tax relief attorney will probably be able to significantly reduce your tax debt and stop garnishments, levies, and liens. They can also provide invaluable help and advice with an IRS audit.


How can a tax attorney help?

If you’ve ever had many dealings with the IRS, you know that it isn’t a pleasant experience. To many American tax payers, the IRS seems like a frightening, omniscient, and omnipotent entity that’s just waiting to pounce on its potential victims. Something like an IRS audit can be extremely stressful, even when you’re completely innocent of any wrongdoing. And when you owe back taxes, the IRS is relentless in collecting its money.

What some tax payers fail to understand, however, is that the IRS is actually made up of human beings. As such, they have the ability to compromise. Of course, just because they have the ability to compromise doesn’t mean that they’ll always be willing to compromise. If you have a knowledgeable tax attorney in your corner, the IRS is usually a lot easier to work with.

IRS audit help

One way a tax attorney can help is if you find yourself facing an IRS audit. A tax audit attorney can lead you through the stressful process of an IRS audit. Tax lawyers know all the ins and outs of such cases. They know and understand your rights as a taxpayer, and they also know the limitations of the IRS’ rights.

Offer in compromise

If you owe back taxes, a tax relief attorney might be able to get you qualified for a program called “Offer in Compromise.” Once you apply, the IRS will consider your ability to pay by examining your past and current financial situation. Your potential future earnings will also be taken into consideration. If you qualify for an offer in compromise, the IRS will reduce your tax liability, sometimes to just a fraction of what you actually owe. Many clients have saved tens of thousands of bucks with this program. Unfortunately, every tax payer won’t be able to use this program.

Taxes not collectible

Another way a tax relief attorney can help is by getting a special status for you if you’re unable to pay your tax liability at the time due to financial circumstances. This status is called “Currently Not Collectible.” If your tax relief attorney can get this status for you, the IRS won’t use any collections strategies to get their money until your financial circumstances improve. Even better, if you get this special status and the period of limitations expires while it’s in effect, the IRS will end any collections activity – forever.

If you owe taxes and can’t afford to pay them all at once, your tax relief attorney will be able to work out a payment plan with the IRS. In many cases, they can also stop any wage garnishments and property liens, too. In addition, tax relief attorneys might also get the IRS to forgive and eliminate any penalties and interest tacked onto the taxes you owe.

How much does a tax relief attorney charge?

Tax attorneys and IRS lawyers charge different amounts, depending on the individual lawyer or firm. Also, every client of the same tax relief attorney will probably not be charged the same amount. Much depends on how complicated your case is.

Tax relief attorneys also base their fees differently. For example, some charge by the hour, while others offer a flat fee. If you’re facing financial hardship, your tax relief attorney might be willing to set up a monthly payment agreement.

How to choose the best tax attorney

Choosing the best tax attorney or the best tax relief attorney isn’t always easy. Make sure the IRS lawyer you’re considering has extensive knowledge of tax laws and has adequate experience in dealing with the IRS. Most of the best tax relief attorneys have a background in accounting, and some have even worked for the IRS. Your tax relief attorney should have a Master’s of Law in Taxation. The best tax attorney for you is one who has handled cases like yours before, with a successful outcome. And since tax laws are constantly changing, be sure to choose a tax attorney who is vigilant about keeping up with current tax laws.

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    • habee profile image
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      Holle Abee 6 years ago from Georgia

      True, but if you owe a bundle to the IRS, it would be cheaper to hire a tax attorney.

    • brewskitimeguy profile image

      brewskitimeguy 6 years ago from Maine

      Such a catch 22, you owe the irs and thenyou owe an attorney...life just keeps getting harder

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      Good point, Mark. I don't think I'd hire a tax relief attorney for something minor, but if I had big tax problems, I'd def use some help! Thanks for commenting!

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      OKMOM, glad you didn't need a tax relief attorney and that you were able to work with the IRS to get the Offer in Compromise. Thanks for visiting!

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      Same here, BJ. I'd really hate the stress of going through a tax audit. Thanks for reading!

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      Dagoglund, glad you stopped by! I hope I never owe the IRS that much, either!

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      Hi, Sandy! We must know some of the same folks who have tax problems. lol

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      DRBJ, thanks! I'll keed that in mind! lol

    • profile image

      Mark Randall 6 years ago

      It really depends on how sever your tax problems are with the IRS and how much you know about dealing with these situations. Often, it seems like it is much less of a headache when people get help from a professional. Great hub!

    • okmom23 profile image

      Donna Oliver 6 years ago from Midwest, U.S.A.

      Went through this years ago with my ex, he had owned a restaurant before we married. To be honest, we worked with the IRS without a lawyer. An "Offer in Compromise" worked well! Great information, voted up.

    • BJBenson profile image

      BJBenson 6 years ago from USA

      I hate to owe any one money. Taxes are even worse to owe!

    • dahoglund profile image

      Don A. Hoglund 6 years ago from Wisconsin Rapids

      Interesting. If I ever make enough money to owe the government $20,000 I'll consider one.

    • Sandyspider profile image

      Sandy Mertens 6 years ago from Wisconsin, USA

      Very informative. I do know people on as acquaintances

      level that should read this.

    • drbj profile image

      drbj and sherry 6 years ago from south Florida

      Holle - if you're self employed and do not falsify your tax returns, you have nothing to worry about re tax audits.

      And I promise to help you get out of jail if it takes 100 years.

      Thanks for the tax relief lesson. :)

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      Hi, Ann! I worry every year about an IRS audit. Hubby is self-employed, and we have a home office. Not that we cheat on our taxes - we don't - but I still don't want to go through the stress of an IRS tax audit! lol

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      HH, how does all this work in the UK? What's your version of the IRS called over there?

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      Pam, did you have to hire an IRS lawyer for the tax audit? When I was married to the ex, we went through an IRS audit. Fortunately, I wasn't very involved because it was mostly about the farming operation, and our accountant/tax attorney handled most of it. Also, my parents had to go through an IRS audit. Theirs was a random tax audit. Thanks for visiting!

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      Chuck, I have mixed feelings about how a tax relief attorney can reduce the amount of back taxes owed by a taxpayer. It doesn't seem fair in a way, but if I owed a large amount of back taxes, I would want some help! lol

    • habee profile image
      Author

      Holle Abee 6 years ago from Georgia

      Onceuponatime, thanks for reading about tax relief attorneys!

    • esatchel profile image

      PDGreenwell 6 years ago from Kentucky

      Very informative and I hope I never have to use this service! Ann

    • Hello, hello, profile image

      Hello, hello, 6 years ago from London, UK

      It was an interesting read how you are dealing with this.

    • Pamela99 profile image

      Pamela Oglesby 6 years ago from United States

      The thought of dealing with the IRS is not pleasant as I hate the way I was treated by a small arrogant man who had a bad attitude. Fortunately I was only audited once and didn't owe much. This is a very interesting hub.

    • ChuckHuckaby profile image

      ChuckHuckaby 6 years ago from USA

      You reminded me that on my debt settlement hub, I should have mentioned that taxes are subject to negotiation as well. It frankly gripes me to see these adds and see how people who owe thousands escape paying so little! Nice hub though.

    • onceuponatime66 profile image

      Jackie Paulson 6 years ago from USA IL

      Thanks for posting this article, I learned so much.