When people are facing a legal battle, the first step that many take is to hire an attorney. Whether it is to file for a bankruptcy, to fight a DUI charge, or to gain defense in a lawsuit, hiring a lawyer is the most logical thing a person can do. Most attorneys specialize in a couple of different fields at any given time. They may handle domestic and criminal cases or they may handle personal injury and workers’ compensation cases. They may be in-house legal defense or primarily work on environmental law. There are many types of representation out there but chances are you have to conduct a quick search online and you will find somebody local to handle whatever situation you may have.
But what should you do when you owe back taxes to the Internal Revenue Service or state taxing authorities? Often times the first place that people look is their local attorney offices. Though this may seem like a good idea, it often times is not. Most attorneys do not specialize in taxes and the ones that do either handle in-house corporation acquisition and mergers with tax benefits, or charge individuals $250 – $400 per hour to handle their case. These factors will often times lead to poor representation and incredibly large charges.
Taxpayers can be represented in front of the Internal Revenue Service and state taxing authorities by three main professionals: Attorneys, Certified Public Accountants (CPAs), and Enrolled Agents. Of the three, the best option is an individual who is admitted to practice before the Internal Revenue Service: an Enrolled Agent.
Enrolled Agents are governed by Treasury Department Circular 230 and are permitted to practice before the Internal Revenue Service based on overall comprehension of all matters connected with representation of taxpayers. Enrolled Agents are the most capable at preparing and filing documents and corresponding with the Internal Revenue Service on behalf of taxpayers.
Enrolled Agents also place all focus on taxes and tax representation whereas attorneys may specialize in other areas of law and only dabble in IRS representation. Likewise, most CPAs are only concerned about tax preparation and have limited knowledge and/or experience with tax representation. Attorneys and CPAs will usually coast 2-5 times as much as an Enrolled Agent as well. The only time a tax attorney is absolutely needed is if a taxpayer were to sue the IRS or is currently facing criminal charges, otherwise, an Enrolled Agent is the best option.
Enrolled agents have unlimited practice rights when dealing with the IRS. There are no restrictions regarding business or individual representation and, like attorneys, Enrolled Agents are able to represent taxpayers in audits, appeals, and collections. Enrolled Agents will always have the knowledge regarding any new changes to tax laws and regulations as they are required to maintain 72 hours of continuing education every three years.