How Bad Do Things Have to Be to Hire a Tax Attorney?

Posted on: 13 April 2021

Folks picturing themselves hiring tax attorneys often imagine the worst of all possible circumstances. That's not always the case, and it's often a good idea to retain the services of a tax attorney to avoid ending up in a bad spot in the first place. Let's look at the times you might want to hire one based on a scale that goes from good to bad.

New Tax Situations

Especially if you're encountering a new tax situation for the first time, you'd be prudent to meet with a tax attorney. For example, someone who is moving their business from a sole proprietorship to an LLC faces a dramatic shift in what they can and can't do on the tax front. They'll need to do a better job of segregate personal and business funds to avoid co-mingling money in a way that could create a tax penalty.

Many personal situations can call for the help of a tax attorney, too. If you've experienced a windfall through something like a settlement or major investment, it's wise to think about the tax implications. A lawyer can identify the tax structure that will likely preserve the most wealth while minimizing the risk of legal exposure.

Foreign Income

Anybody who has foreign income will need to report it properly. This applies even if you don't have a tax obligation under state or federal law. Consult with a tax attorney to learn what the reporting requirements are.


Tax notices are scary-looking documents that might indicate nothing more than a tiny error on your part or that of the government. A notice could also be the first step toward a full-on tax case against you. That's a wide range of potential outcomes, but the odds of achieving a positive one go up if you respond to the notice quickly and as fully as possible. However, you'll want a tax attorney to help you understand the notice and to reply with the appropriate documents to answer the government's questions.

Fraud Allegations

At the far end of the scale of good to bad, fraud allegations represent the worst of scenarios. You want a tax attorney if you're facing these sorts of allegations because there may be additional criminal exposure. You're going to have to disprove the government's case, pay, or negotiate a settlement. Collect all notifications you receive, make copies, and contact a tax attorney as soon as possible.