In some cases, it may be difficult to distinguish what your CPA is capable of helping you with and which tasks are better suited for a tax attorney. Both are experts when it comes to tax matters but in different ways. While your CPA is an expert at preparing and submitting your taxes correctly, you’ll need a tax attorney in the event that IRS notices inconsistencies in your tax submissions or if you’re the subject of an audit. In any case, you’re best off having access to both experts.
What does a CPA do?
A Certified Public Accountant (CPA) has a significant educational background under their belt. They are required to have completed 150 hours or more of undergraduate educational studies before passing an extensive CPA examination. Additionally, they have to commit to 120 hours of continued education every 3 years. As such, they considered some of the highest level experts when it comes to handling tax preparation. A simple way to think of CPAs is that all CPAs are accountants, but not all accountants are CPAs. The process of becoming a CPA is more complex than an average accountant.
As such, a CPA’s services are not often utilized by any average taxpayer, but instead are usually utilized in more complex cases. CPAs know how to abide by federal laws while still minimizing your tax liability and maximizing benefits. Developing a strong ongoing relationship with a CPA may suit your needs if you are looking to build a long term tax plan and need support sticking to it.
CPAs are often capable of providing various services to their clients, in addition, to tax preparation. Some additional services they may provide include the following:
- Financial record review
- Maximizing deductions
- Business structuring
- Health insurance selection
- General accounting
Many people choose to have a go-to CPA available for support on a regular basis. If this is not the case for you, you may choose to consult them when filing your taxes, completing an application for a loan, completing an internal audit, or when reviewing tax payments and balances. Their skills and expertise are best suited to assist you when handling these situations.
What does a tax attorney do?
While a tax attorney is still an excellent resource to taxpayers, they serve a different set of needs than CPAs. CPAs are technically qualified to represent you before a court in the event of an audit, a tax attorney is likely a better choice in situations where you may be involved with trouble with tax authorities.
Similar to CPAs, tax attorneys have to complete an intensive educational path before qualifying to satisfy their role. After completing a bachelor’s degree, they must complete a Juris Doctor degree and study to take the bar exam for the state in which they intend to practice. Once they have passed the bar exam, their license must be kept up with continued ongoing education. On top of that, many tax attorneys choose to pursue a Master of Laws in Taxation to further their specialization in their field.
Tax attorneys specialize in the legalities of tax payment and their services are most often called upon in defense cases when taxpayers are faced with audits from IRS, EDD, or other federal tax authorities. While tax attorneys may have slightly varying specialties, one thing most tax attorneys have in common is expertise in tax controversy and dispute resolution.
One of the benefits of working with a tax attorney is that only tax attorneys have an attorney-client privilege that protects communication between a client and an attorney. This privilege can restrict IRS and California State tax agencies from discovering information provided to attorneys in confidence.
Tax attorneys fulfill various services for their clients as previously mentioned. The following include the various reasons you may need to consult a tax attorney:
- IRS tax audits
- Criminal tax defense
- Reporting ownership of foreign bank accounts and corporations
- International business transactions
- Tax disputes and IRS tax collection
While CPAs and tax attorneys both work within a similar framework, their unique specialization equips them for varying roles. In some cases your business may only need to utilize the services of one or the other, however, in most cases, the two roles complement one another. While your CPA may be an excellent ongoing partner to assist with the day to day management and filing of your taxes, they may not be the best-suited partner in the event of trouble with tax authorities. Rather than challenging your CPA to attempt to manage tasks outside of their usual specialties, reach out to the experts at Milikowsky Tax Law to assist with any legal tax concerns you may have.