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Tax Attorneys v. CPAs: What You Need to Know

March 02, 2018
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Your specific situation will determine whether a tax attorney or a certified public accountant (CPA) is right for you.

Here’s what each one can do for you and how to take it from there:
 

Tax Attorney

Tax attorneys specialize in the IRS tax code and provide advice on complex legal issues.

If you need representation, particularly in the areas of trusts, estate planning, tax disputes, business tax law, a tax attorney can negotiate for you. They are powerful negotiators who will know how to appeal and advocate on behalf of your interests, bringing difficult negotiations to an expedient resolution.

A tax attorney can negotiate for you during and after an audit, settle your debt for less than you owe by making an offer in compromise or seeking a penalty abatement. In short, your tax attorney will save you time and money by providing you leverage you wouldn’t necessarily have on your own.

Reasons you may need a tax attorney:

  1. You are bringing a suit against the IRS.
  2. You need legal counsel about the structure and tax treatment of the business you just started.
  3. You have committed a tax crime and need the protection of attorney-client privilege.
     

CPA

Certified public accountants (CPA) are trained in maintaining business and financial records.

If you’re looking for financial planning and tax strategy to figure out personal and professional financial issues that aren’t complex or likely to go to court, the right CPA can ensure that you’re on the right track. They will file or correct your tax returns and make sure that you are in compliance with the tax code.

Reasons you may need a CPA:

  1. You need someone who will handle your annual tax return.
  2. You need someone to manage finances and taxes for your business, who can determine profitable new product lines, diversify investments, and provide long-term business consulting.
  3. You’re worried about paying for retirement or college and need help with a savings plan.
     

Bottom Line

Both tax attorneys and CPAs have stringent educational and professional requirements to practice.

Tax attorneys must earn a law degree and pass the state bar association exam. They may choose to pursue other educational opportunities in a specialty of taxation law or acquire a CPA license. CPAs have state-based requirements for the CPA exam and most of them require a minimum of five years of study, or a minimum amount of work experience in the field. CPAs will also need to pass the Uniform CPA examination.

CPAs work prominently on auditing as well, serving as an external authority to review and validate corporate financial statements for investors and additional parties to evaluate.

A CPA can help to strengthen your legal case, but it’s the tax attorney who provides the advantage of attorney-client privilege.

If you’re facing penalties with the tax authorities, then a tax attorney’s training is particularly helpful in handling the minutiae of the law for your case. A CPA is not going to help you with an intricate web of tax-related disputes that are stacked against you.

While their expertise overlaps at some points, it’s a tax attorney you will need for that major audit or court case with the IRS.