What’s the Difference Between a Tax Attorney vs a CPA?

Tax Attorney vs CPA

If your tax situation is simple enough, you likely have never needed the help of a CPA or a tax attorney. Instead, you’ve purchased the same tax software you always purchase, plugged in some key numbers from your W-2, then sat in anticipation as lines of computer code calculated whether you received a tax return or owed more money to the government.

What happens if your taxes are more complicated, however? Or, what do you do if the government alleges you filed your taxes incorrectly or not at all?

In these cases, you need the help of an tax expert, such as a CPA or specialized attorney. Because taxes can be so complex, it can also be difficult to know which expert’s help you need, i.e. a CPA vs a tax attorney. Knowing the ins and outs of who can help your tax issues can take you a step closer to getting out of potential trouble.

What Is a Tax Attorney? 

A tax attorney, per the name, is a lawyer who specializes in tax code. These legal professionals can offer their insight, expertise, and strategies through many parts of the tax process, from helping determine the taxable fallout from certain financial activities to representing a client in court.

Tax attorneys receive the same training as other lawyers. They attended an accredited law school, received their Juris Doctor, and passed the bar in the state in which they practice law.

However, some tax attorneys go beyond this minimum level of training to achieve further accreditation. For instance, they may receive a Master of Laws degree in taxation or become a certified accountant, too. This gives them extra knowledge of tax laws and how they can impact people, organizations, and businesses.

What Is a CPA? 

A certified public accountant is someone who has received the required education and passed the necessary exams to be designated a CPA by the American Institute of Certified Public Accountants. Like how lawyers must pass their specific state’s bar exam, the qualification for a CPA varies by state as well. However, most states have common qualifications that must be met to become certified:

  • Received a bachelor’s degree in accounting, business administration, or finance 
  • Hold at least two years of public accounting experience 
  • Passed the CPA exam 

To maintain certification, CPAs also need to complete at least 120 hours of continuing education every three years. This helps ensure they are up to date on any changes in tax or finance law.

CPAs can consult with individuals and businesses regarding their financial plans and tax implications. They can also perform audits to ensure that financial records are up to code.

Because CPAs hold power over finances with their specialized knowledge, they, much like lawyers, are bound by a code of ethics. For instance, a CPA cannot provide both consulting and auditing services to a business, as it may result in the CPA approving of his or her own legal or financial malfeasance.

Are There Different Types of Tax Attorneys? 

The different types of tax attorneys generally provide their skills during one of three phases of taxation:

Tax Planning 

Those who specialize in tax planning work with clients to understand the potential tax implications of certain financial endeavors. For instance, if a nonprofit entity were to merge with a for-profit entity, then a tax planning specialist can help all parties understand how their tax outlook will change.

However, these attorneys don’t just help businesses or organizations. They may help individuals set up an estate or trust that shields bequeathed funds from further taxes or provide other strategies that can ensure the funds end up where the person who passed intended.

Tax Compliance 

Attorneys who specialize in tax compliance may also do work in the planning stages to ensure that compliance standards are met. However, they are more likely to focus on making sure that financial events that already occurred show up properly on the individual’s or organization’s tax returns. These attorneys focus on document preparation and retention, tax filing, and financial record-keeping.

Tax Controversy 

Finally, lawyers who focus on tax controversy help clients who are facing legal trouble due to their taxes. They may negotiate with the IRS, represent their client in court, or work administratively to resolve these disputes in a matter that provides an advantageous legal outcome for their client.

Are There Different Types of CPAs? 

CPAs may also have specialties or specific areas of accounting they focus on, including areas outside of taxes. A CPA may perform forensic analyses of financial records, conduct audits for organizations to ensure they are following appropriate finance law, or assist individuals with their financial planning.

Sometimes these specialties require further certification. CPAs may have additional initials in their title that indicate they’ve achieved a specialized certification.

Generally, a CPA who specializes in taxes won’t need additional certification. However, they’ve likely furthered their education on taxes through seminars, classroom learning, or real-world experience.

How Do You Know If You Need a CPA Vs a Tax Attorney? 

So, knowing that CPAs and tax attorneys can both handle complex tax situations, how do you determine which one you need? A simple rule of thumb is this: If you need help with finances, go with a CPA. If you need help with the law, go with a tax attorney.

A CPA can help you with tax planning, prepare your taxes, and file them for you. If you’re audited by the IRS, a CPA can also help you by preparing documents and explaining why you filed your taxes the way you did.

If the issues go beyond a mere audit, though, or if you’re assigned a revenue officer to your audit case, it’s time to hire a tax attorney. When the IRS takes the step of assigning a revenue officer, it is likely looking to garnishing your bank accounts or wages. A tax attorney is best equipped to protect your rights, strategize legal maneuvers, and negotiate with the IRS.

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