Breaking Down Costs: How Much Does a Tax Attorney Really Charge?

Dealing with tax issues can feel like navigating a minefield. Whether you’re facing unpaid taxes, IRS audits, or complex tax court litigation, a tax attorney can be a valuable ally. But how much does hiring a tax attorney really cost?

In this article, we’ll break down the costs and detail related factors that influence what tax attorneys charge so you can make an informed decision.

Why Hire a Tax Attorney?

Tax law is complicated. Hiring a tax attorney can provide you with useful information, legal protection, and much-needed peace of mind. Whether you’re up against a tax dispute, need help with your tax returns, or require representation in tax court, a tax attorney can be your guide through the intricate world of tax law.

How Much Do Tax Attorneys Generally Charge?

The cost of hiring a tax attorney can vary widely based on several factors. Tax attorneys typically charge either a flat fee or an hourly rate, with an average rate of between $200 and $500 per hour. However, the total costs can fluctuate depending on the complexity of the case and the attorney’s experience.

Flat-Fee Arrangements

A flat fee is a one-time charge for a specific service. This fee structure is often used for straightforward tasks like filing tax returns or setting up installment agreements.

Flat fees offer predictability and can help you budget more effectively. You’ll know upfront how much you’ll pay, regardless of how many hours the attorney works on your case.

Hourly Rate Structures

When charged an hourly rate, you’ll pay for the time your attorney spends working on your case. This can include time spent on phone calls, document drafting, and court appearances.

An attorney’s hourly rate will depend on their experience and location, as well as the nature of your tax issue. Highly experienced attorneys in major cities typically charge more than those in smaller towns.

Common Services and Their Costs

The following are some of the most common services tax attorneys offer:

Tax Court Litigation

If you’re involved in litigation, be prepared for higher costs. This complex and time-consuming process often requires a significant amount of the attorney’s time, and time is money, quite literally.

IRS Audits and Appeals

Representing you in an IRS audit or appeal can also be costly. However, having a skilled professional on your side can save you money in the long run by potentially reducing your tax liability.

Tax Debt Resolution

Services like negotiating installment agreements or penalty abatement with the IRS can also come with differing fees. The overall cost will depend on the specifics of your situation.

Factors Affecting Tax Attorney Fees

As mentioned, several key factors can influence how much you’ll pay for a tax attorney’s services. They include:

Knowledge and Experience

As with many professions, more experienced and highly regarded tax attorneys generally charge higher fees. Their insights can be invaluable, particularly in tricky cases.

Geographic Location

Where your attorney is located can significantly impact their rates. As a rule, attorneys in metropolitan areas charge more than those in rural areas.

Case Complexity

The more difficult your tax issue, the more you can expect to pay to resolve it. Cases involving significant tax debt, multiple years of unfiled returns, or business taxes typically cost more.

How to Save Money on Tax Attorney Fees

Fortunately, there are some strategies you can implement to minimize the cost of hiring a tax attorney without sacrificing quality.

Compare Different Attorneys

Not all tax attorneys charge the same rates, even within the same geographical and practice areas. It’s smart to shop around, interview different attorneys, and find one who offers the right balance of resourcefulness and reasonable fees.

Consider a Flat-Fee Arrangement

For certain services, a flat fee can be more cost-effective than an hourly rate. This is particularly true for routine matters like filing tax returns or setting up installment agreements.

Handle Simple Matters Yourself

If your tax issue is relatively straightforward, you can likely save money by handling it yourself or hiring a tax professional rather than a tax attorney. However, for complex situations, it’s often worth paying for a tax lawyer’s unique skill set.

Understanding Different Fee Structures

Knowing the different fee structures and the expenses they contain can help you choose the best payment method for your situation.

Some tax attorneys require a retainer, an upfront payment that serves as a down payment on future services. The attorney will bill against this retainer as they work on your case, making it tough to predict the final cost.

In rare instances, tax attorneys may also work on a contingency fee basis, where they only get paid if they resolve your case successfully. Such an arrangement is more common in personal injury law, but it can apply to certain tax matters as well.

Typical Costs for Common Tax Issues

As far as actual numbers go, here are examples of some of the most common costs of working with a tax attorney:

Unpaid Taxes

If you owe back taxes, hiring a tax attorney to negotiate with the IRS can cost between $2,000 and $10,000, depending on the amount of debt you owe and other circumstances.

Tax Liens

Removing a tax lien can also be expensive. Be prepared to pay anywhere from $1,500 to $5,000 for a tax attorney’s services in this area.

Penalty Abatement

Getting tax-related penalties reduced or removed can save you big in the long run. Up front, however, this service may cost between $500 and $3,000.

Audit Representation

If you’re facing an IRS audit, the cost to have a tax attorney represent you can range from $2,000 to $10,000 or more, depending on the audit’s scope and complexity.

Tax Court Litigation

When a dispute escalates and goes to tax court, the fees can be substantial. Legal representation for litigation could cost you anywhere from $10,000 to $50,000 or more. In this situation, your attorney might charge both an hourly rate and fixed costs for certain services.

Offers in Compromise

An offer in compromise allows you to settle your tax debt for less than the full amount you owe. The cost of having an attorney prepare and submit an OIC can range from $3,000 to $7,500.

Installment Agreements

Setting up an installment agreement with the IRS, which allows you to pay your tax debt over time, typically costs between $1,000 and $3,500.

Business Taxes

For business tax matters, such as audits or disputes involving significant sums, legal fees can start at around $5,000 and climb to $25,000 or more. Once again, your lawyer may charge an hourly fee, flat fees, or a combination of the two.

Unfiled Tax Returns

Addressing multiple years of unfiled tax returns can be labor-intensive and therefore costly. Hiring a tax attorney for this service generally costs between $500 and $3,000 per return.

It’s important to keep in mind that these are average figures — actual costs can vary considerably from one lawyer to the next.

The Role of Attorney-Client Privilege

One of the key benefits of retaining a tax attorney is the protection afforded by attorney-client privilege. This means that your communications with your attorney will be confidential, providing you with a safe space to discuss all aspects of your case. Such an arrangement can be especially welcome if you’re facing severe penalties or potential criminal charges.

Alternatives to Hiring a Tax Attorney

It may not always be necessary to hire a tax attorney to resolve your particular issue. Here are some possible alternatives to consider:

Tax Professionals

In some cases, hiring a tax professional, such as a certified public accountant (CPA) or enrolled agent (EA), might be sufficient. These professionals are qualified to handle many tax issues, often at a lower cost.

Tax Resolution Companies

There are also companies that specialize in resolving tax debt. While they may not provide the same level of legal acumen as a tax attorney, going this route could be a cost-effective option for simpler tax problems.

Questions to Ask When Hiring a Tax Attorney

Asking the right questions of your prospective tax lawyer can ensure that you find the best professional for your needs.

Start with questions geared toward their experience and areas of focus. How many years have they been practicing tax law? Do they have experience with cases similar to yours? What makes them confident they can achieve a favorable outcome in your case?

From there, you can go on to clarify their fee structure. Do they charge a flat fee or an hourly rate? Are they willing to negotiate these fees, or are they set in stone? Are there any additional costs you should be aware of?

While you’re doing your research, it’s a good idea to check references and read reviews. Speaking to past clients can provide valuable insight into the attorney’s effectiveness and reliability.

How Much Do We Charge?

To get detailed information tailored to your case, we recommend taking advantage of a complimentary case review. Our virtual consultations are completely free, allowing you to discuss your situation with our veteran tax attorney from the comfort of your home. We also offer free phone consultations for additional convenience.

If you’d prefer an in-person meeting, we charge a nominal fee of $139 for a 60-minute session. During this meeting, you’ll be given a comprehensive overview of the potential costs and the best course of action for your needs.

Contact Tax Relief Counsel today to schedule a consultation and take the first step toward getting out from under your tax problems.