Do I Need a Tax Attorney in New Jersey?
What business owners, and others, need to know about when to call a tax lawyer
on July 12, 2018
Updated on February 8, 2021
When you own a business, it can consume your every thought. What is the next move? Should we expand locations and staff, or look for more efficiencies? How do we position ourselves that will be the most advantageous for the future? There are almost too many considerations to account for. That, according to Jason Navarino, is precisely where tax attorneys come in.
Business owners will often ask when they need a tax attorney rather than their accountant, but “what type of tax lawyer does someone need is probably the real question to ask as a business owner,” Navarino says.
“There are many different kinds of tax attorneys, and the term ‘tax lawyer’ can mean a number of different things. When I practiced in New York City, I was a tax attorney that would advise business owners on issues of their business taxes—particularly as they enter into deals and sophisticated transactions, but at other times as well. When I moved to New Jersey, I’d say, ‘I’m a tax attorney,’ and people would say, ‘Great. Can you do my will for me?’”
What a tax attorney can do ranges wildly. There are business tax issues, estate planning issues, individual income and gift tax planning, and many tax attorneys work in property tax litigation, as well. If you get a property tax assessment that you feel is too high, they will appeal those assessments to the board of taxation. On top of that, there are tax controversy lawyers that deal with the state and government appeal on income tax. Many more tax attorneys work with clients who contemplate selling or buying their business or acquiring a new business, or those looking to enter into a joint venture.
If you are contemplating the purchase or sale of a business, it is essential to analyze three different aspects: the structure of a deal, representational issues, and indemnification issues. In terms of structure, Navarino reels off a litany of questions: “Is it an assets deal? Is it a stock deal? Is it a merger? Is it possible to do it as tax deferred transaction as in a tax-free organization or, if it’s a taxable deal, can we sell or buy capital gain to optimize income? If I’m a buyer, can I deduct the purchase price and how quickly?”
When it comes to representations given in a sale, people need to know exactly what they are getting. “Buyers will want to know that the seller’s taxes have been paid, that there are no hidden liabilities and that everything is taken care of,” Navarino says.
Indemnification will protect both parties in the event that the representations aren’t fully truthful or unforeseen issues come up. “If the seller has unpaid taxes, they will make the buyer whole for that and the buyer won’t have to pay those taxes out of pocket. And, vice-versa, the seller doesn’t want to pay for the buyer’s taxes, either,” says Navarino.
“The heart of every deal is always the economic terms,” he continues. “As a tax lawyer, that’s what you’re focused on.”
Be certain that you’re focused on the right things if you’re business is growing or getting sold. In each of these instances, a reputable and experienced tax attorney is essential to properly plan for your future and that of your business.
If you want more information on this area of law, see our tax overview.