There are numerous situations in which a lawyer who practices in tax law may become necessary to assist an individual with certain taxes. Tax law is a broad legal term that covers the practice of law as it relates to the assessment and payment of federal, state, and other taxes. Tax laws arise from federal, state, and local authorities and are based upon federal and state constitutions and laws.
A tax lawyer is a lawyer who understands tax laws and assists their clients in navigating tax laws in a way that is most advantageous for their clients. When an individual does not follow the tax laws that regulate their person or their business, then they may be audited and subject to penalties under the various tax laws.
A tax lawyer will then be able to represent their client and protect their legal interests while under investigation by the taxing authorities. The following sections contain information regarding common situations in which a tax lawyer may be helpful.
Corporate Tax Lawyers
A corporate tax, also known as a corporation or company tax, is a type of fee the federal government imposes on a business’s profits. According to the Federal Tax Cuts and Jobs Act of 2017, the current federal corporate tax rate is 21%. This means that after all business expenses have been deducted from the corporation, it will be required to pay the federal government 21% of its total revenue when filing a federal corporate tax return.
For example, a corporation may have made $1 million in revenue after deducting all legitimate business expenses. In that case, the business would owe 21% of its $1 million in taxes to the federal government, which would be $210,000.
Additionally, states may impose their own separate corporate income tax rates in addition to the federal corporate tax. Not every state applies a state corporate income tax rate and those that do generally have rates that vary considerably based on jurisdiction. The standard range for state corporate income tax rates is between 1-12%, with most state rates averaging in the middle.
Aside from federal and corporate taxes, a corporation may also pay taxes that are specific to its circumstances. Some common types of corporate taxes that a business may pay include:
- Employment or Payroll Taxes: The percentage that gets taken out of an employee’s paycheck, which may be used to pay off taxes such as those for social security benefits, Medicare, or unemployment;
- Real Estate Taxes: Some businesses may need to pay real estate taxes on property that it owns, such as if a corporation owns the building in which it operates;
- Estimated Taxes: A business may need to make installment payments on taxes periodically throughout a given tax year, which is generally required when a business expects to owe $500 or more in federal income taxes;
- Franchise Taxes: Some states place a special kind of tax on businesses that want to operate or remain open in their specific state, known as a “franchise tax,”; and
- Excise Taxes: Excise taxes are only applied to specific goods, such as alcohol, gasoline, cigarettes, some luxury goods, and other items regulated by various tax laws.
Creating and operating a corporation or business startup should not be done without the guidance of an experienced corporate tax lawyer. An attorney can:
- Help you choose the best business management structure for the corporation’s needs;
- Draft contracts and agreements;
- Review all licensing and regulatory guidelines and ensure that the corporation remains in compliance with all local and federal tax laws.
A corporate attorney will also ensure that any tax breaks that a corporation may receive are received and put their client in the most advantageous position possible in regard to taxes. Further reading on corporate taxation can be found here:
Income Tax Lawyers
Income tax is a tax on the percentage of a person’s earnings, due to both the state and federal governments collected each year on April 15. The amount of tax that a person owes is typically calculated by subtracting any permitted deductions from their income. Most people pay their income tax by having the taxes withdrawn from their paychecks throughout the year. This is done by employers who will withhold a portion of their employee’s wages and send the amount to the Internal Revenue Service (“IRS”).
Personal income tax laws are often very nuanced and require a thorough understanding of both state and federal income laws and tax rates. As such, if you are having any issues regarding personal income tax, it is in your best interests to consult with an experienced personal income tax lawyer.
An experienced income tax attorney will be able to answer any questions you may have regarding the personal income tax laws, as well as represent you in any court proceedings if you have been charged with tax evasion or any related charge.
Further reading on income tax laws can be found here:
International Tax Lawyers
In legal terms, the term international tax law refers to the set of tax laws that govern how much taxes must be paid by:
- United States citizens that receive income from foreign countries;
- Foreign nationals and foreign corporations that receive income from within the United States.
International tax attorneys are attorneys who are knowledgeable in international tax laws and assist foreign nationals and corporations or United States citizens who receive income from outside the United States. Specifically, tax attorneys will be knowledgeable of international tax treaties that prevent double taxation. They can also assist anyone being audited on their income sources. Further reading on international tax laws can be found here:
Property Tax Lawyers
Property tax lawyers are lawyers who represent their clients on matters of taxes that affect real or personal property. Property taxes are taxes that are assessed on any property that an individual owns. In many states, real property, also commonly referred to as real estate, is taxed on an annual or quarterly basis. However, many states tax personal property, such as a person’s motor vehicle. Personal property is typically any moveable property, whereas real property is not moveable.
The real property taxes an individual must pay depends on their state. Although each state has a different tax rate for real property, taxes are generally based on a percentage of the appraisal of the property in question or the property’s assessed value. Further reading on income tax laws can be found here:
Tax Evasion Lawyers
Tax evasion lawyers are lawyers who represent clients who are under investigation or facing charges of federal or state tax evasion. Tax evasion occurs when an individual commits an act designed to defraud the Internal Revenue Service (“IRS”) or state taxing authority. The definition of tax evasion is very broad and allows state prosecutors or the IRS to go after an individual for almost any misstatements made on their taxes.
Tax evasion typically involves an individual or corporation misrepresenting their income to the IRS by:
- Underreporting their yearly income;
- Inflating their tax deductions;
- Hiding taxable money;
- Transferring funds to offshore accounts.
Further reading on tax evasion can be found here:
Where Can I Find the Best Tax Lawyers for My Case?
As can be seen, tax laws can be very complex and require a thorough understanding of both United States tax laws and international tax treaties. If you are unsure of your current tax situation or have any questions related to taxes involving yourself or your business, you should consult an experienced tax lawyer.
An experienced financial attorney can help you determine your or your company’s tax status and obligations and provide you with guidance on fulfilling those obligations, if any. Additionally, an experienced financial attorney can help you if you ever face an audit because of taxes and ensure your interests are protected.
