Why You Should Never Keep Secrets from Your Tax Attorney
Let’s say you are being audited by the IRS, or maybe you owe a large amount of back taxes. You have hired a tax attorney to fix the problem. No one enjoys having to expose their private lives and personal finances to a third party. How much do you have to tell your lawyer? And how honest do you really have to be?
You’ve heard the saying that secrets don’t make friends – that is especially true when it comes to the lawyer representing you. Being fully transparent and honest with your lawyer will allow them to truly do the job they were hired to do. Remember that attorney-client privilege applies to civil, criminal, and tax matters.
Important Note: When dealing with IRS or state tax matters, your communication with a CPA does not have the same privacy privileges. While there is a CPA-client privilege in the IRS Code, it does not have the same level of protection. For instance, it does not apply to criminal matters, and it may not apply to tax return preparation services. That is why hiring a tax attorney to represent you is important.
Your next thought may be, well, how will anyone know if I keep something to myself or alter the facts a little? Here are two real-life examples from Tax Law Offices’ clients to answer that question.
In our first example, Tax Law Offices was hired to represent a client during an IRS audit. Our attorney received a call from the audit agent. The agent had independently verified that several items the client provided to us were not accurate. He then warned the attorney that if those items were not corrected, our client would face consequences.
In another example, a client hired us to assist in setting up a payment plan for back taxes. The IRS looks at multiple factors to determine the minimum monthly payment a client can make, but the client’s income is one of the main ones.
Our attorney got a call from a collection agent that IRS hired to collect the unpaid taxes from our client. That collection agent had independently verified that our client did not disclose some of their income on prior tax returns. That client also did not disclose this income to our attorney.
There is an important lesson found in both of these examples, and it all comes back to independent verification. The IRS, state government, or independent collection agencies absolutely can and will verify the information they are given.
The difference is that they are considering their best interest, not yours. Your attorney can only do the job you hired them to do and protect YOUR best interest if they have all of the facts.
If you are dealing with a state or federal tax matter, contact Tax Law Offices. We can help!