My wife and I made the decision to open a residential cleaning business. We needed enough money to get the equipment, do a bit of advertising and get the licensing and insurance to protect ourselves and our customers. For about two years, things went very well, but then, things took a terrible spin for the worst after we hired a few employees to help us with the workload. Since then, we have gone bankrupt and have gone back to working full time jobs. If you are struggling with your business and considering bankruptcy, this blog can give you some answers to the many questions that you have.
In a perfect world, your taxes would automatically sort themselves out to the government's satisfaction -- but unfortunately, real-life challenges, errors and misunderstandings often get in the way. If your tax situation is causing you sleepless nights and anxiety-ridden days, you may be wondering whether a tax attorney might be just what the doctor (or accountant) ordered. But what do tax attorneys do, exactly, and how do you know whether they can help in your specific case? Here are three critical questions to help you make intelligent choices.
1. What Are Some Signs That I Need to Contact a Tax Attorney?
Tax attorneys perform a wide range of functions within their relatively narrow field of legal specialization. For one thing, their knowledge and skill set may include both personal and corporate tax law; this flexibility can be especially helpful if you own and operate your own business. Their understanding of tax, finance and accounting issues overlaps somewhat with that of CPAs, but they're also qualified to give legal advice and represent individuals and businesses in court cases and legal disputes. In other words, your CPA can tell you whether you're in hot water, but it's up to the tax attorney to help you extricate yourself from it. Some of the triggering events that should prompt you to contact a tax attorney include:
Tax attorneys can counsel you on the current laws affecting your situation so you can make informed decisions. Better yet, any information you share with your tax attorney is privileged, with the attorney serving as your mouthpiece to the IRS. This is a critically important benefit -- when you represent yourself directly, it's all too easy to volunteer seemingly innocent information that could end up working against you.
2. Do I Need a Tax Attorney to Help Me With My Audit?
The prospect of a tax audit has caused many a nightmare among terrified taxpayers, but but that doesn't mean you need to place an urgent call to your tax attorney for assistance. In most cases, an audit can be resolved with the aid of a skilled accountant and plenty of paperwork to document the claims on your tax forms. If it's determined that you owe unpaid taxes, penalties and fees, the best recourse is simply to pay them, even if you have to take out an installment plan or make an offer in compromise.
Tax attorneys can come to the rescue if the IRS disputes or dismisses your best efforts to provide accurate information. At this point, the government has taken the stance that you're lying to it, which means that it may formally accuse you of the crime of tax fraud or tax evasion. This is the point where you absolutely need to bring an experienced tax attorney on board.
3. Do I Need a Tax Attorney or a Bankruptcy Attorney?
The answer to this question is, "You need both." If it's becoming clear to you that you need to file for bankruptcy due mainly to an impossible tax debt, you might assume that your first call should be to a bankruptcy attorney -- but this isn't necessarily the case. While a bankruptcy attorney is necessary for making sure your bankruptcy is presented to the court as effectively and persuasively as possible, you'll first want to get all your information straight, including your tax data. So it actually makes sense to talk to your tax attorney before putting your bankruptcy attorney to work.
Tax attorneys can pre-sort many details to ensure that you survive your bankruptcy in the soundest possible financial condition. For instance, they can make the initial determination of how much of your tax debt can be discharged through bankruptcy; if the amount isn't sufficient to give you the "fresh start" you seek, then you might actually want to look into alternative strategies instead. If you own a small business, your tax attorney can also advise you as to whether restructuring your business pre-bankruptcy will allow you to retain more financial assets post-bankruptcy.
If you've decided that you definitely need a tax attorney, check out a site like http://www.wflaw.net. But remember to use the same care and judgment you would apply toward selecting any other trusted advisor. Get testimonials from satisfied clients, steer clear of attorneys that insist on full payment up front, and make sure you feel comfortable and confident about the person you're dealing with. Good luck!
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