Tax Attorney Fees | How I Calculate Them
As of Oct. 25, 2021
Tony Ramos here, and today I'd like to talk to you about how I set my attorneys fees to do tax resolution work.
In this post, I explain how I set my fees, and the steps I go through to do so.
Keep in mind that my goal is to get you the maximum possible resolution for your specific situation.
After handling hundreds of tax resolution cases, I have come up with a logical sequence which informs how I set my fees. Much like getting a diagnosis from your doctor before treatments are started, I investigate your situation before recommending a possible resolution. I quote a fee to investigate, after which I recommend a course of action and quote a fee to implement my recommendation.
When we have our first conversation, I do not charge you and I will ask you about:
- How much you think you owe
- Which years you owe tax for
- What type of tax (income, employment, etc.)
- Who is in your household
- What is your financial condition (assets, liabilities, income and expenses)
- For business owners, I will ask about your gross and net income, number of employees and whether you operate as a sole proprietor or have an entity (corporation, LLC, etc.)
- Other information that I think I need to know about as our conversation develops
After I find out the information above, I can give you general parameters of a possible resolution. As well as the strategy to use. I will clarify and answer any questions about this.
Then, I am ready to quote an Investigation fee. In order to understand the details of your tax debt. And your financial condition in the way that the IRS will view it.
So how much will you charge me, exactly?
Typically, as of today (October 29, 2021) I charge $500 for the Investigation Phase for taxpayers who are employees. The same if you are self-employed without others in the business. More complex individual cases and businesses can have substantial IRS tax debt with more complex issues.
For these cases, I charge between $1,000 and $2,000 to conduct the Investigation. After which I am ready to propose resolution options and quote a fee for the resolution I recommend. Sometimes there are more than one option that my client can pursue.
This consists of several steps:
- You sign a power of attorney to authorize us to speak to the IRS on your behalf, whether personal or business
- We contact the IRS to find out …
- What tax returns you need to file
- Balances of taxes, penalties and interest for each year owed
- Collection Statute Expiration Dates for each year. (The IRS only has 10 years to collect tax debt, with some exceptions. After which they can no longer collect the tax debt.)
- We order Transcripts and send a copy to you so that we can review what the IRS states you owe. This is to determine if you’ve been credited with payments, and find other valuable information
- We request that HOLD on collection enforcement be granted to you until we can propose a resolution on your behalf
After completing the Investigation Phase, I am ready to recommend one, or more approaches to best resolve your IRS tax debt. I will then quote a fee based on what we agree is your best strategy going forward.
By conducting the Investigation Phase first, both the firm and the client are treated fairly. If a fee is quoted before investigating the details of the case, either I will charge you too much or not enough. By having the information resulting from the investigation, both you and I will have a better understanding of what legal services will be required and can make a more informed decision.
I base my fee on several factors.
I base my fee on a number of factors, including: complexity of case, length of time it will likely take to complete our representation on your behalf before the IRS, whether or not an appeal may need to be filed, whether or not a Tax Court case may need to be initiated, the strategy for your particular situation, legal research that may have to be conducted, and other factors that must be considered to properly handle your case.
Fixed vs Hourly fees.
The great majority of fees that we quote are fixed fees, not hourly fees. My experience in handling many cases before allows me to set fixed fees. This is how I would like to be billed for professional services and how my clients usually prefer to be quoted a fee as well.
Sometimes an hourly fee is a better way to handle a case, or a part of a case. This depends on who in the firm is doing the work (attorney, Enrolled Agent, legal assistant, etc.). Small audits can be quoted a fixed fee but larger ones, and Tax Court litigation may require hourly billing.