Written by

Tom Grupa

March 5, 2024

Average Cost of Tax Attorney Fees

The cost of your tax attorney will be based on the reason why you need a tax lawyer (type of case), the level of experience your attorney has, and more. Although each tax attorney will charge their own hourly rate, you can expect to pay anywhere between $200 and $400 per hour.

Can a Tax Attorney Really Help?

If you're in the market for a tax lawyer, this is the guide for you. Although each case is unique, this article will provide you with the types of fees you can expect when hiring a tax attorney. This will help you better understand what your potential legal fees will be so that you can compare your options and plan ahead.

Hourly vs Flat Tax Attorney Fees

Most often, a tax attorney will charge a flat rate or an hourly fee in exchange for their professional services.

• Hourly -- This is the most common pricing structure. Although each tax attorney will charge their own hourly rate, you can expect to pay anywhere between $200 and $400 per hour. However, if you hire an attorney from a large firm, located in a major city, you can pay up to $1,000 per hour.

• Flat -- In other cases, you'll be offered a flat rate. This one-time fee will cover the services you require regardless of how much time the attorney spends working on your case. Generally, this option is offered when a case is fairly simple or routine.

When comparing the two, there are pros and cons associated with both. Paying your tax attorney an hourly rate can be attractive, as you will not overpay when your case is settled swiftly. However, the opposite can also occur if your case is more challenging to resolve.

If you anticipate a complex case that may take longer to resolve, a flat fee is ideal. That way, you can hire a tax attorney understanding exactly what their services will cost -- regardless of the timeline. Although many consumers prefer this option, you may not have much of a choice.

The Average Cost of Hiring a Tax Attorney

What you will be charged not only depends on the expected timeline of your case, but also the services you require. The following breakdown will provide you with the average cost of common tax services. Your tax attorney would work with you and the IRS to resolve issues that may require additional legal support.

Types of Tax Attorney Fees:

• Installment Agreement - $750 to $1500

• Offer In Compromise (OIC) - $3,500 to $6,000+

• First-time Penalty Abatement (FTA) - $1,000 to $2,500

• IRS Audit (simple) - $2,000 to $3,000+

• IRS Audit (comprehensive) - $5,000+

• IRS Appeals - $5,000+

• US Tax Court Litigation - $10,000+

Please note, the above fees are based on average costs. The actual fee you can expect to pay will depend on your case and even your location. The level of experience your attorney has can also impact the final cost.

What is an installment agreement with the IRS?

The IRS Installment Agreement is a proposed agreement that you will present to the IRS that allows taxpayers to pay off debt through a monthly payment plan. However, since the IRS encourages immediate payoff of your debt, interest penalties of 8% - 10% a year will apply.

What is an Offer In Compromise (OIC)?

An Offer In Compromise (OIC) is an agreement a taxpayer will offer to the IRS to settle your tax liabilities for less than the original amount owed. In most cases, taxpayers who can fully pay their debt through an installment agreement or other means, generally won't qualify for an Offer In Compromise.

What is a First-time Penalty Abatement (FTA)?

A First-time Penalty Abatement (FTA) is ideal for first-time non-compliant taxpayers. In this case, you can request an FTA if you failed to file or failed to pay. Typically, your attorney fees will cost around $1,000 to $2,500 for an FTA.

According to the IRS, you may qualify for relief from penalties if the following are true:

• You didn’t previously have to file a return or you have no penalties for the 3 tax years prior to the tax year in which you received a penalty.

• You filed all currently required returns or filed an extension of time to file.

• You have paid, or arranged to pay, any tax due.

What does it mean if you get audited?

When you receive an IRS audit, your organization's or individual's accounts and financial information is under a review and examination. The IRS needs to ensure the information reported is correct and that you are following all tax laws. In addition, the IRS needs to verify the reported amount of tax is correct.

What is an IRS Appeal and how do I request an appeal?

In the case that you disagree with the IRS's conclusion, you may request an appeal by filing a written protest. The Office of Appeals reviews cases after the IRS has made its decision, offering an objective point of view on each case.

A simple IRS Appeal starts at $5,000 in attorney fees.

What is US Tax Court Litigation?

If all else fails, you may be required or need to go to US Tax Court. This costs will typically start at $10,000 and go up from there based on what you owe. You will definitely need an attorney at this point. Learn more about the US Tax Court and your options.

How to Save When Hiring a Tax Attorney

If you cannot afford a tax attorney, you can handle your case by yourself. This can be an intimidating process. However, there are many resources available to help you solve your specific tax-related issues. You can find self-help taxation courses online, many of which provide step-by-step details.

Alternatively, you can opt for a tax attorney that offers a payment plan. It is in your best interest to contact a number of lawyers to obtain a more accurate quote based on your legal requirements and location. You can begin by finding a tax attorney near you.