Taxes are certainly complicated to handle. Whether you’re trying to minimize your tax liability, want to find a way to settle back taxes, or are facing tax-related litigation, you need the help of a professional. But what criteria determine whether you should choose a tax attorney or a certified public accountant (CPA) for your needs?
CPAs specialize in tax planning and preparation together with general financial planning and advice, whereas tax attorneys specialize in complicated legal tax matters and provide legal representation in court situations. Whether you need a CPA or a tax attorney, even seasoned professionals have trouble solving tax issues with the IRS. The legal representation you choose to support or represent you will make or break your financial future.
At Victory Tax Lawyers, we have saved our clients more than $85 million. We negotiate with the IRS on a daily basis to help our clients find tax relief, handle IRS tax levies and liens, and get through stressful tax audits. If you need tax-related legal help, contact us for your free attorney consultation today.
This post will explore the differences between tax attorneys and CPAs — their training, the typical scope of their work, and when you need them.
Do I Need a Tax Attorney or CPA?
Although they have some overlapping education and experience, certified public accountants and tax attorneys focus on different areas. Tax attorneys primarily help clients understand tax laws and how those laws apply to their situations, and they also offer legal counsel. They represent clients in tax court and provide legal representation for taxpayers facing audits.
A licensed CPA will usually offer routine tax services like preparing and filing documents, and they can provide guidance in the event of an IRS audit. However, some offer long-term financial planning advice.
Legal Expertise vs. Financial Expertise
Tax attorneys possess specialized expertise in tax law interpretation and client representation. That means that many of them represent clients in court or advocate for their rights during IRS disputes.
If you need a knowledgeable professional to stand up to the IRS on your behalf, the team at Victory Tax Lawyers is here for you. We’ll aim to thoroughly understand your situation and then collaborate with you to craft a personalized solution that suits your unique needs.
On the other hand, while CPAs can communicate with the IRS on a client’s behalf, their expertise is more focused on financial matters. They can help clients manage finances and prepare and file taxes. They can also offer support for clients facing an IRS audit.
Who Can Represent Me in Court?
This is probably the biggest difference between a CPA and a tax attorney. While tax attorneys can offer legal counsel for clients whose tax matters must be resolved in a courtroom, CPAs typically cannot provide legal representation unless they are enrolled agents. CPAs must demonstrate extensive knowledge of the tax code through an IRS exam, as well as complete 72 hours of continued education every three years.
Scope of Services
Tax attorneys specialize in interpreting tax laws and offering legal guidance tailored a the client’s unique circumstances. They’re equipped to represent clients in court, handle complex disputes with the IRS, and provide legal support during audits.
CPAs, on the other hand, focus more on the financial side of taxation. They handle tax preparation and filing, assist with audits, and may also offer financial planning services to help clients achieve long-term financial goals.
What Is a Tax Attorney?
Tax attorneys specialize in tax law, tax preparation, tax liability, and tax disputes and will, more often than not, represent you in tax court and negotiate with the IRS in your name. They sometimes offer tax-related legal advice to business owners and help people minimize taxes while planning their estates. Furthermore, they often assist with tax debt relief and represent clients in court during tax-related legal disputes.
Here’s a look at some of the other services a skilled tax attorney may provide:
- Helping businesses stay compliant with changes in tax law
- Helping high-net-worth families manage their finances
- Creating strategies for taxpayers to minimize or eliminate tax debt
- Representing people charged with tax fraud and similar crimes
- Representing people who have been audited by the IRS
- Representing heirs and administrators in trust-related litigation
- Guiding clients through the process of declaring bankruptcy
Before they start to practice law, tax attorneys go through a long educational process, which includes:
- Earning a bachelor’s degree
- Earning a Juris Doctor (law) degree
- Passing the state bar exam
- Pursuing a specialization in tax law
There are several different ways an attorney can pursue tax law specialization. Two examples are earning a Master of Laws (LL.M.) degree in taxation and becoming a board-certified tax law specialist.
When to Hire a Tax Professional
If you are facing any kind of tax issue that intersects with the IRS, like facing tax-related litigation or being charged with tax fraud, a tax attorney may be able to help. Tax attorneys can also assist you with IRS disputes, back taxes, and similar issues.
What Is a Certified Public Accountant (CPA)?
A certified public accountant is an accountant who has been licensed by the state. Because CPAs must have extensive experience and pass a challenging exam, they are credentialed and qualified to represent clients before the IRS.
While CPAs don’t have the same level of familiarity with tax law as tax attorneys, they are still knowledgeable enough to help with many tax-related matters. However, they don’t generally represent clients in tax court.
CPAs must undergo a multi-step process to become certified:
- Earn a bachelor’s degree (usually in accounting)
- Pass the Uniform CPA Exam and an ethics exam
- Work for 1-2 years under the supervision of a CPA
Typically, CPAs focus more on tax preparation and tax advice than on tax-related legal issues. They also assist clients with bookkeeping, financial reporting, and similar matters.
When to Hire a CPA
CPAs can help you with routine tax planning and preparing financial returns. If you have a business and need to audit financial statements or hire someone to handle bookkeeping, working with a CPA is a good choice.
How Much Does It Cost to Hire a Tax Attorney vs. a CPA?
Broadly speaking, tax lawyers bill more per hour than CPAs. But there is some overlap. CPAs usually bill a few hundred dollars per hour. Someone with a brand-new CPA license might charge less, but very experienced CPAs have rates that often rival those of attorneys.
Location, along with experience and specialty, causes hourly fees for CPAs and tax attorneys in California to show substantial differences. Here’s a general idea:
- CPAs: Certified Public Accountants in California usually charge hourly fees between $150 and $350. CPAs who are early in their careers tend to set their rates at the lower end of the scale, while those who possess substantial experience or special skills, particularly in high-demand cities like San Francisco or Los Angeles, often charge at the upper end or even exceed it.
- Tax Attorneys: In California, tax attorneys begin their fees at approximately $200 to $400 per hour for those with limited experience but increase substantially for attorneys who demonstrate advanced expertise in complex tax issues. Tax attorneys in major cities who focus on tax litigation or international tax law are likely to charge more than $600 per hour.
How to Choose Between a Tax Attorney and a CPA
You know you need a tax professional, but which type do you need? If you can’t decide between a CPA and a tax lawyer, take these considerations into account:
Assess Your Needs
It can be difficult to determine the full extent of your tax issues. However, when you’re deciding between an attorney and a CPA, the bottom line is to ask yourself whether you need legal experience or financial or accounting expertise.
If your tax problem intersects with the law in any way, like if you’re trying to ensure your business is compliant with new tax laws or if you’re concerned about being charged with tax fraud, then consulting a tax attorney is best. If your problem primarily has to do with accounting, like if you need help conducting an internal audit of your business, then a CPA is likely the right choice.
Budget Considerations
Hiring a CPA often costs less than an attorney. However, in some cases (like applying for an Offer in Compromise), paying a little extra to hire an attorney may save you considerable money in the long run.
Specialized Services
If you are looking for help with a specific service, choosing a professional may be simpler. When preparing tax returns, you should hire a CPA to get the best service, while the appropriate response when undergoing tax-related legal disputes is to hire a lawyer.
Situations Where You Need Both
Some situations require you to employ both a CPA and a tax attorney. A complex situation requiring legal and financial guidance can benefit from consulting both a Certified Public Accountant and a tax attorney.
Multiple state locations for your business require you to deal with numerous tax issues as well as complex legal requirements. A CPA offers assistance with tax filing and strategies for reducing tax obligations while also providing guidance on general financial management.
A tax lawyer will be familiar with the tax laws your company must follow in each location. Because they have a deep understanding of the law, they can help you draft company policies that won’t run afoul of the IRS.
In complicated situations like these, a collaborative approach is often best. With a CPA and a tax lawyer advising you, you’ll be much less likely to run into surprise tax problems later on.
What Should I Look for When Hiring a Tax Attorney or a CPA?
If you need help resolving a tax dispute, choosing the right professional makes all the difference. Don’t just choose the first CPA or tax lawyer you find. Take the time to review case results or learn what their specialties are.
You should also look for a professional who has both experience and a good reputation. It’s particularly important to look for a professional whose experience overlaps with your needs. For example, if you want assistance with resolving back taxes, you should look for a tax attorney who routinely helps other taxpayers achieve that same goal.
Credentials, skills, and reputation are all things you should consider. However, many people overlook the importance of choosing a professional they feel they can trust. Talking about tax issues can be stressful and emotionally draining, and when you’re facing a complicated problem, you may need to spend a considerable amount of time working alongside a tax lawyer or CPA. When you’re comfortable around your tax professional, it makes the process a little less nerve-racking.
Can I Switch From CPA to Tax Attorney if My Needs Change?
Yes. CPAs and tax lawyers understand that tax issues evolve over time, and it’s not unusual to find that you need more specialized tax-related legal advice than you initially realized. Many people switch between CPAs and tax lawyers depending on the problems they’re dealing with.
How Can A Tax Attorney Help With Tax Errors
Tax laws can be complex and interpreting them incorrectly can result in tax liabilities or other tax complications. If you’ve misinterpreted a tax code or made a mistake in the preparation of your tax returns, the expertise of a tax attorney can be incredibly beneficial in the following ways:
Expert Defense and Resolution
One of the critical roles a tax attorney plays in tax disputes is serving as a mediator between you and the IRS. They handle all communications in compliance with legal procedures and IRS guidelines, putting you in a strong position for a favorable outcome. If you’ve misinterpreted the tax code, an experienced tax attorney can assess the situation to determine whether you have grounds to contest the charges against you. With their expertise in tax law, they will ensure your case is presented accurately to the IRS, improving your chances for a favorable resolution.
Minimizing Fines and Penalties
Misinterpreting the tax code can easily lead to a tax dispute, and if the IRS finds fault, it may trigger significant fines and penalties. A tax attorney can often negotiate with the IRS to reduce or even remove these charges, especially when the error resulted from an honest mistake. Their intervention can save you money and prevent your financial situation from getting worse.
Comprehensive Guidance
Beyond resolving disputes, a tax attorney also provides comprehensive guidance on compliance to help you avoid similar mistakes in the future. This may include tips for record-keeping, understanding the implications of new tax legislation and tax planning. Applying these practices will not only help you avoid disputes but also save you money through eligible deductions.
Need Expert Assistance From a Tax Attorney?
A CPA or tax attorney can be incredibly helpful. While a CPA will be your best choice for tax planning assistance, along with tax return preparation and general accounting tasks, professional tax lawyers should be your choice if you need assistance with reducing tax debt or resolving disputes with the IRS and handling tax-related litigation. Tax attorneys also deal directly with the IRS on a regular basis, so they understand which legal strategies are most likely to work in a given situation.
The Victory Tax Lawyers team is here to help you take control of your tax situation. We can review any IRS notices you receive, help you lower your tax debt, and represent you if you’re audited. Reach out to us today to set up a free attorney consultation. Would you like to visit our office for in-person assistance? You can find us on the map here.
Frequently Asked Questions
What Is the Difference Between a CPA and a Tax Lawyer?
A CPA and a tax attorney are both tax experts, but they do not share the same specialization. CPAs are highly credentialed accountants who primarily focus on tax planning and preparation, as well as general financial advice. Their expertise lies in the financial and accounting aspects of taxation.
On the other hand, a tax lawyer handles legal disputes, complex tax issues, IRS matters, and litigation. If you need someone to stay on top of your numbers, tax planning, general bookkeeping, and preparation of financial reports, a CPA is the right tax professional. But if you need help resolving complex tax situations, a tax attorney is the one you should meet.
Is a Lawyer or a CPA Better for Negotiating With the IRS?
While CPAs are highly skilled in managing financial records and providing tax advice, tax attorneys are trained in negotiation and litigation. When it comes to negotiating with the IRS, especially in matters involving audits, appeals, or legal disputes, a tax attorney is often the preferred choice due to their legal training and ability to advocate on your behalf.
Do Tax Attorneys Make More Than CPAs?
Salaries for CPAs and tax attorneys can overlap depending on experience, specialization, and geographic location. On average, experienced CPAs earn around $54,000 to $123,000 annually. Tax attorneys typically earn between $68,000 and $200,000 per year, with higher salaries often reflecting greater levels of experience, expertise, and results in practice.
How Does a CPA Apply the Law to Finance and Investments?
A CPA ensures your finances and investments comply with tax laws and reporting standards. They help minimize tax liabilities through strategic planning and guide you in structuring your investments to meet legal requirements. While they don’t offer specific investment advice, CPAs can advise on the tax implications of different options, assist with retirement planning, and help you stay compliant when managing estate finances.
