When Should I Hire A Tax Attorney? A Masterclass on Dealing With The IRS
If you’re dealing with the IRS, you’re probably asking the same question many taxpayers do: “Do I really need to hire a tax attorney?” The honest answer is you don’t always have to hire a tax lawyer, and we’ll disclose how you decide.
Some tax issues can be handled on your own, especially if they’re small, straightforward, and haven’t escalated. But once the IRS starts sending certified letters, assigns a Revenue Officer, or threatens collections, it’s no longer a DIY project. A tax attorney can step in, protect your rights, and negotiate outcomes that would be difficult or impossible to secure on your own.
This article breaks down when hiring a tax attorney is worth it, when it’s not, and how to tell the difference based on your situation.
Even in these situations, it’s a good idea to schedule a consultation with a tax attorney, especially if you’re unsure about your next steps or want to be confident you’re not overlooking a better option.
When You Should Hire a Tax Attorney (And Why It Matters)
1. You Owe More Than $25,000 (Especially Over $50,000)
If your IRS debt exceeds $25,000, you’re no longer dealing with a low-priority balance. And once it crosses $50,000, the IRS considers it high risk. At over 50k, you’re far more likely to face aggressive enforcement actions, like tax liens, wage garnishments, or having a Revenue Officer assigned to your case. These are all signs the IRS is preparing to collect in full, by force if necessary.
Having a tax attorney at this stage can dramatically change your outcome. They can protect your assets, challenge inaccurate balances, and negotiate settlement options like an Offer in Compromise. In one recent case, a client who owed more than $80,000 worked with a J. David’s attorney and secured an OIC settlement of just $1,715, saving over 97% of the original balance.
Without skilled legal representation, many taxpayers end up overpaying or missing out on relief programs they qualify for.
2. IRS Threats of Lawsuits or Asset Seizure
If you’ve received IRS notices threatening legal action, property seizure, or an IRS bank levy, the situation is no longer routine. These warnings typically mean the IRS has exhausted earlier collection efforts and is preparing to escalate.
In one case, the IRS attempted to recover nearly half a million dollars from a J. David’s client after issuing a refund in error. The client repaid part of the amount, but the IRS continued pressing for the balance. Eventually, a Revenue Officer threatened a lawsuit.
Our legal team engaged directly with the IRS on the matter. Eventually, the government finally filed suit, but it was too late since we successfully proved they had missed the statute of limitations deadline. No further payment was required.
This kind of legal protection isn’t possible without strategic tax defense. When real enforcement is on the table, hiring a tax attorney is not optional; it’s essential.
3. Facing or Responding to an IRS Audit
Getting audited by the IRS can be overwhelming, especially when you’re unsure what triggered it or how to respond. Audits often uncover alleged reporting errors, disallowed deductions, or income discrepancies. These findings can quickly translate into large tax bills, penalties, and long-term consequences.
That’s why having a tax attorney involved early makes a difference. An experienced attorney can:
- Represent you in audit interviews
- Communicate directly with IRS agents to clarify misunderstandings
- Challenge audit conclusions with proper documentation
- File an appeal or bring your case before the U.S. Tax Court if necessary
Take, for example, a J. David’s client who was audited for two consecutive tax years and faced over $1 million in proposed adjustments. Our attorneys reviewed the IRS findings, rebuilt the client’s expense records using market data, and escalated the case to Appeals. The final outcome resulted in nearly $600,000 in taxes and penalties eliminated, which is unlikely without expert legal intervention.
If the IRS is reviewing your returns, don’t go in unprepared. The earlier you seek representation, the more control you maintain.
4. You Own a Business or Are Self-Employed
Running a business or working for yourself often leads to more complicated tax situations. From payroll taxes to deductible expenses, the IRS takes a closer look at self-employed taxpayers and business owners, especially if large balances or late filings are involved.
If you’re dealing with IRS scrutiny over 941 payroll taxes, facing a trust fund recovery penalty, or falling behind on employment tax payments, a tax attorney can help you:
- Navigate complex business tax liabilities
- Defend against personal liability for company debt
- Strategically resolve payroll and trust fund penalties
A tax litigation attorney can help your business stays protected and that you don’t take on unnecessary personal risk.
5. Dealing With IRS Penalties You May Not Owe
Tax penalties can feel like a punishment, especially when they stack up faster than your original debt. In many cases, taxpayers are hit with fees they don’t fully understand or don’t believe they deserve. A tax attorney can step in to evaluate your situation and determine if penalty relief is possible.
You may qualify for relief through:
- First-Time Penalty Abatement, if you’ve maintained a good compliance history
- Reasonable Cause Relief, for hardships like illness, natural disasters, or unavoidable errors
- Innocent Spouse Relief, if your spouse (or ex) caused the issue without your knowledge
One of our clients owed more than $150,000 in penalties. After three rounds of appeals and persistent negotiation, those penalties were completely removed, cutting their debt in half.
If your balance feels inflated due to penalties and interest, it’s worth having a legal expert review your case.
6. Unfiled Tax Returns Can Trigger Serious IRS Consequences
Failing to file one or more tax returns will delay your refund and can escalate into a major liability. When returns go unfiled, the IRS may create Substitute for Return (SFR) assessments on your behalf. These estimates are based on limited data and often inflate what you owe by excluding deductions or exemptions.
A tax attorney can help by:
- Preparing and submitting accurate tax returns
- Disputing inflated IRS assessments
- Preventing potential civil fraud penalties or even criminal charges for willful non-filing
If you’re years behind on taxes, it’s not too late to catch up, but it’s critical to have the right legal strategy in place.
7. IRS Threatening Liens, Levies, or Wage Garnishment
If the IRS or a state tax agency is threatening enforcement actions, like taking your paycheck, freezing your bank account, or placing a lien on your property, your tax case has reached a critical stage. These collection tactics are not only disruptive, but they can begin quickly once your account moves into active enforcement.
A tax attorney can help you respond strategically and fast. They can:
- Request an immediate collection hold
- File legal appeals to stop levies or liens before they’re finalized
- Negotiate a resolution — such as an Offer in Compromise — to settle the debt and lift enforcement
This kind of legal intervention can be the difference between financial stability and losing access to your income or property. For instance, one client, owed over $106,000 in sales tax to the California Department of Tax and Fee Administration after an audit he couldn’t dispute. Though he’d moved to Missouri, the state was preparing to garnish his income. J. David’s legal team stepped in and negotiated a settlement of just $17,927 to prevent the garnishment and close the case for good.
8. You’re Submitting an Offer in Compromise or IRS Settlement Request
IRS settlement programs like Offer in Compromise (OIC) or Partial Payment Installment Agreements require more than just filling out forms. You’ll need to prove, with detailed financials, that you genuinely cannot afford to pay the full debt.
A tax attorney can help:
- Prepare a legally sound offer that meets IRS requirements
- Support your case with a strong hardship narrative
- Ensure your documents reflect the true scope of your financial situation
One J. David client in North Carolina owed $75,111 in unauthorized substance taxes. After missing a deadline, the client lost access to an initial settlement offer. By submitting a new OIC and substantiating financial hardship, our team secured a final settlement of just $1,585, saving over $73,000.
When the outcome hinges on the details, professional legal help can make the difference between a rejected offer and real debt relief.
The IRS is Forgiving Millions Each Day. You Could Be Next.
Not All “Help” Is Actually Helpful: Red Flags to Avoid
When you’re desperate for relief from tax debt, it’s easy to fall for bold promises and polished sales pitches. Unfortunately, the tax relief industry is full of companies that care more about getting your money than resolving your IRS problem.
Here are the most common red flags that indicate a tax relief company may not be working in your best interest:
1. “We Guarantee IRS Settlement Approval”
No company can guarantee that the IRS will approve an Offer in Compromise or settlement, not even the best tax attorneys. Any promise like this is a clear warning sign.
2. You Never Speak With a Licensed Professional
If your point of contact is always a “consultant” or “advisor” but never a CPA, Enrolled Agent, or Tax Attorney, your case may not be receiving the professional attention it needs.
3. Pressure to Sign Immediately
Be cautious if you’re pushed to make a quick decision over the phone or sign contracts during the first call. High-pressure sales tactics are a hallmark of disreputable firms.
4. Vague or One-Size-Fits-All Promises
Phrases like “We settle every case for pennies on the dollar” or “We’ll stop all collection actions instantly” are designed to sound good, but they rarely reflect your actual situation.
5. Large Upfront Payments With No Clear Timeline
You may be asked to pay thousands before the company even reviews your IRS records or creates a resolution strategy. This is especially risky if there’s no clear scope of work or timeframe.
The bottom line: If a company can’t clearly explain its qualifications, process, and fees or makes promises that sound too good to be true, that’s your cue to walk away.
Don’t Wait Until It’s Too Late to Hire a Tax Attorney
The earlier you bring in a qualified tax attorney, the more control you have over your outcome. Whether you’re facing aggressive IRS collection actions, considering an Offer in Compromise, or trying to protect your assets during an audit, legal representation can help you avoid costly mistakes.
Hiring a tax attorney is not always necessary, but in high-risk or high-dollar situations, it could be the difference between financial relief and years of ongoing debt.
Contact a professional to get the IRS off your case now!
