If you’re facing a tax issue, the thought of hiring a tax attorney may have crossed your mind. However, you might be unsure about the cost implications. In this blog post, we’ll explore the various ways tax attorneys charge for their services and provide some useful tips for managing costs effectively.
Understanding the Billing Methods
Tax attorneys typically employ one of three billing methods: hourly, fixed or flat fee, or contingency basis. It’s important to note that in tax law, attorneys are not allowed to provide services on a contingency basis. This restriction exists to avoid conflicts of interest. When attorneys have a financial stake in the outcome of a case, they may be tempted to withhold information or documents from the IRS or state government, compromising the integrity of the process.
As a result, tax cases are usually charged on an hourly basis. Complex cases involve extensive fact-finding and legal research to comprehend the intricacies of the situation. Navigating such cases and achieving favorable outcomes while remaining honest and transparent with the government requires considerable time and effort.
Factors Influencing the Cost
When it comes to hiring a tax attorney, understanding the factors that influence the cost can help you anticipate and manage expenses effectively. Here are some key considerations to keep in mind:
Requesting an Estimate
To start off, it’s advisable to request an estimate from your attorney at the beginning of your tax case. This estimate is based on the available facts at that moment and provides a preliminary understanding of the potential costs involved. However, it’s important to note that as the case progresses, circumstances may change, which can impact the overall cost.
As your tax case unfolds, new facts and information may come to light. These discoveries can increase the complexity of the case, potentially leading to additional work and higher costs. It’s essential to stay in regular communication with your attorney to keep them informed of any new developments and ensure that the estimate remains updated.
Resolving complexities in your favor can also contribute to higher costs. Tax cases often involve intricate legal issues that require thorough research, analysis, and strategic planning to achieve a favorable outcome. Your attorney’s expertise and effort in navigating these complexities can impact the overall cost of your case.
In some situations, it may be necessary to hire experts to support your tax case. For example, in criminal cases, engaging a Certified Public Accountant (CPA) under a Kovel letter can be crucial. The Kovel letter allows the CPA to work with your attorney under the protection of attorney-client privilege, ensuring that the information shared remains confidential and shielded from IRS subpoenas. However, hiring such experts adds an additional cost to your case.
Beyond expert fees, other expenses may arise during your tax case. For instance, if the government executes a search warrant on your office and seizes a large volume of records, the need to scan and process these documents at the IRS’s offices can result in significant costs. Other potential expenses include copy services, research materials, administrative fees, and any necessary court filings. It’s important to discuss and clarify with your attorney which expenses you may be responsible for during the course of your case.
By understanding these factors, you can have a clearer picture of the potential cost implications associated with hiring a tax attorney. This knowledge will allow you to make informed decisions and effectively manage your budget throughout the course of your tax case. Regular communication with your attorney is essential to stay updated on any changes and ensure that you are well-informed about the expenses involved.
Tips for Cost Management
To effectively manage the costs associated with hiring a tax attorney, maintaining regular communication with your attorney is crucial. Request mid-month updates on the progress of your case and ask for an estimate of the expenses incurred by a certain date each month. This proactive approach will help you avoid unexpected bills at the end of the month. It’s also essential to express your expectations clearly and seek clarity from your attorney. Open communication will ensure that you have a better understanding of the expenses involved and minimize the chances of misunderstandings.
By understanding the different billing methods employed by tax attorneys and actively managing costs through regular communication with your attorney, you can ensure that you receive quality legal representation while avoiding any unwelcome financial surprises. If you require tax representation in IRS or other government tax audits, feel free to contact us today at (858) 450-1040 to speak to one of our qualified tax lawyers.
Remember, hiring a tax attorney is an investment in protecting your rights and achieving a favorable outcome in your tax case.
At Milikowsky Tax Law, we have over a decade of experience working with IRS and tax audits. We’re experts in defending business owners in the face of IRS or other government agency audits.
Interested in learning more? Read on to learn how to respond to an IRS audit.