What’s the difference between a CPA and a Tax attorney?
Even though both CPAs (Certified Public Accountants) and tax attorneys are tax experts, their expertise is different. For example, while a tax attorney deals with the legal implications of tax matters, a CPA can help you with the financial implications of your taxes.
CPA vs. Tax attorney: The Difference in Education
CPAs and tax attorneys are required different training. Generally, a CPA is required about 150-hours of college-level training. As part of their education, CPAs are required to take accounting, business and ethics courses. Beyond course work, to become a CPA, one must pass a four-part CPA exam.
Tax attorneys are required to earn a bachelor’s degree before applying to law school. Once you graduate from law school and pass the BAR exam,
you can practice law. Many tax attorneys also obtain an advanced degree in tax law or state certification. Getting hired might be easier with an LLM (Master of Laws) degree for tax attorneys.
What does a tax attorney do?
Tax attorneys provide litigation counsel to those with tax issues. Your tax attorney might get input from a CPA, but it’s your tax attorney who should represent you in U.S. Tax Court or IRS Appeals Office.
Tax attorneys are trained to help you with tax-related legal matters in or out of court. They complete an intensive educational path starting with a bachelor’s degree before taking the BAR exam after completing a Juris Doctor degree.
Once an attorney has passed the bar exam in the state where she wants to practice tax law, she must stay current with continued ongoing education. If that wasn’t enough education, many law firms require their tax attorneys to earn Master of Laws in Taxation to further their specialization.
Tax attorneys specialize in the legalities of taxation. Their services are generally called upon in defense cases when taxpayers are faced with audits from the EDD, Internal Revenue Service, or other federal tax authorities.
Tax attorneys are highly specialized. For example, beyond tax controversy and dispute resolution, many tax attorneys further specialize in areas such as environmental tax law or international tax.
One key advantage of working with a tax attorney is attorney-client privilege. Only tax attorneys have attorney-client privilege, protecting communication between clients and tax attorneys. This privilege can restrict California State tax agencies and IRS from discovering information provided to tax attorneys in confidence.
Tax attorneys provide various services for their clients. The following include the various reasons you may want to consult a tax attorney:
- IRS tax audits and appeals
- Criminal tax fraud defense
- Tax and estate planning
- Reporting ownership of foreign bank accounts and corporations
- International business transactions
- Tax relief and resolution
- Tax disputes and IRS tax collection
While CPAs and tax attorneys specialize in tax matters, they offer different services due to their unique training and specialization.
While your CPA may be an excellent partner to help you with your taxes and tax planning, she wouldn’t be qualified to represent you in court or various other legal matters. Therefore, rather than asking your CPA to attempt to manage tasks outside of her training and qualification, contact a tax attorney to assist you with any legal tax concerns.
What is a CPA?
So, what does a CPA do exactly? CPAs are certified public accountants, ranked among the most trusted accounting professionals. They are licensed, accounting professionals. Before becoming a CPA, you must pass the CPA exam administered by the AICPA.
In addition to passing their respective State Board of Accountancy’s education and experience requirements, CPAs are required to maintain high standards through continuous education.
What is the role of a CPA?
A CPA’s role revolves around fulfilling the client’s taxation, accounting, auditing, and bookkeeping needs.
They have a strict code of ethics compliance, and their license indicates expertise and integrity. In addition, CPAs maintain and audit financial records and prepare tax returns. While tax attorneys can help you with tax returns, CPAs have the upper hand due to their years of training, experience, knowledge.
Certified Public Accountants offer insightful financial advice and assist business decision-making while ensuring legal compliance. In addition, they can provide efficient tax planning by minimizing tax liability.
That is to say, CPAs could keep your account books in good order, provide auditing services, keep track of your finances, file tax returns, and fulfill tax obligations.
Moreover, CPAs can advise you on financial planning to deliver monetary benefits since they have an extensive understanding of your business through your financial records.
Is Tax Attorney and CPA the same?
A CPA and a tax attorney is not the same professional. Tax attorneys are law school graduates who passed the BAR exam and specialize in tax issues. CPAs, on the other hand, are not legal professionals. Instead, they are skilled in managing financial records and preparing tax returns.
Tax attorneys emphasize dispute-oriented legal tax issues. They are trained to represent their clients through tax-related disputes and litigation and help minimize an entity’s tax liability by structuring assets.
While CPAs are authorized to represent clients in IRS disputes, they do not have the education, training or experience that a tax lawyer would have to represent a client. If you face an audit with the potential for severe penalties, a tax attorney would be the right choice due to their negotiation skills and expert knowledge of legal principles and case law.
Tax attorneys also offer one significant benefit that a CPA cannot, attorney-client privilege. It is a level of confidentiality that an attorney can provide, but an accountant can’t. As a result of attorney-client privilege, any information you provide your tax attorney is protected, meaning your tax attorney cannot be forced to testify against you.
This offers a distinct advantage if you deal with possible criminal charges from the IRS and wish to prevent discussions with your tax expert from being used against you.
Tax attorneys generally handle complex taxation legal matters.
Can the same person be a CPA and a tax attorney?
Tax attorneys are focused on complex tax issues. CPAs are tasked with keeping financial records in order and preparing taxes. If you work with a professional who is not only a CPA but also a tax attorney, you get the expertise of two professionals.
A dually-licensed tax-attorney CPA has the financial background to understand the intricate details of your organization’s balance sheets. An attorney-CPA can also advise on business structure to reduce tax liabilities and hopefully help you avoid any issues with the IRS and other tax agencies.
Unlike a CPA, a dually-licensed tax-attorney-CPA can help should you ever run into any legal trouble regarding your taxes. As tax attorneys, dually-licensed tax-attorney CPAs are trained to represent you due to their litigation training.
And, hiring one person who is both a tax attorney and a CPA might save you some time and money. It’s easy to see the value in working with a dually-licensed tax-attorney CPA.
Do I need a CPA or tax attorney?
Whether you need a CPA or a tax attorney depends on your tax situation. Do you need to file your taxes? Do you need legal guidance and advice on complex legal issues in the area of taxation?
Knowing which professional you should hire depends on your unique situation and your tax status with the IRS.
Tax attorneys are legal experts. They understand the IRS tax code inside and out. Attorneys specializing in tax law are trained to analyze complex case facts and build arguments around the desired outcome. Although tax attorneys can help you with your taxes, tax filing isn’t their specialty.
Do I need to hire a tax attorney?
There are several reasons you or your business might need to hire a tax attorney, including:
- Assistance with determining tax treatment
- Help with international tax matters
- Represent you in a lawsuit against the IRS
- Help you with tax planning
Do I need a CPA for my LLC?
Not all LLCs need a CPA, at least not before you can justify the expense. Since CPAs are more expensive to hire than bookkeepers or accountants, it may not always make sense for an LLC to hire one.
Once your business starts to turn a profit, it might be a good time to speak with a CPA. When you work with an accountant or bookkeeper, she may recommend speaking with a CPA as your business grows.
But, if your LLC is investor-backed, you should work with a CPA and a tax attorney.
Do I need a CPA for my taxes?
Most people don’t need a CPA for their taxes. For example, if you are someone with a simple tax return (1040 or 1040EZ), you don’t need a CPA for your taxes.
If you own a small business, you might need a CPA. You should consider hiring a CPA when merging, buying, or expanding your business. Also, if you are dealing with complex tax issues or tax planning, speaking with a CPA is smart. Working with a CPA might save you a lot of money on your taxes and ensure that your tax filings are in good order.
Do I need a CPA for my business?
You need a CPA for your business if your taxes and financials are complicated or if you are not a tax expert. You may not need a CPA all the time, but you should speak with one to avoid critical mistakes.
Especially when you start a business, a CPA can help you make sure it’s set up the right way. In addition, working with a CPA can help you choose the right business entity.
Also, if you plan on purchasing or selling a business, a CPA can provide critical financial information for your business.
But, most importantly, the expertise of a CPA is critical at tax time. You need a CPA to file your taxes and help you with tax planning.
Do I need a CPA to start a business?
Before starting a business, you might ask yourself, “should I talk with a CPA before starting a business”? You don’t need a CPA to set up the business entity, but working with a CPA can help you choose the correct business entity. Even if you meet with a CPA once before you start a business, it could be very beneficial for your business.
Before you start a business, a CPA can help to:
- Decide how to structure your company. Your CPA can tell you the advantages and disadvantages of various business entities. The CPA can help you decide to start an LLC or a corporation.
- Finalize your business plan. CPAs aren’t just tax professionals. They can help you develop a strategy for your business.
- Set up payroll and other financial processes.
- Keep your business compliant with the IRS and other tax agencies.
DISCLAIMER: The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation.
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