What's the Difference Between a Tax Attorney and a CPA

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Many successful firms are afraid of interacting with the Internal Revenue Service as tax season approaches. The most prevalent phobia is being audited, however this does not occur as frequently as you may imagine.

It's far more probable that your company will need to deal with a tax obligation, such as back taxes, because they might result in asset seizure. Taking on the IRS on your own involves dealing with individuals who are more knowledgeable about tax law than you are.

There are two categories of specialists that may assist people and organizations with their tax concerns. The tax attorney is the first, and the CPA, or certified public accountant, is the second.

Certain specialists are trained to aid and assist people and organizations in the preparation of taxes and the resolution of tax problems. The two categories of those specialists are CPA or Certified Public Accountant and Tax Attorney. CPAs and tax attorneys work in diverse ways to assist companies and people in keeping accurate tax records, making timely payments, and maintaining friendly relationships with IRS officials.

Despite the fact that both professions may assist you in preparing tax documents and providing advice on tax obligations, tax attorneys are lawyers who specialize in tax law, CPAs, on the other hand, are accountants who have received considerable training and certification in the financial aspects of tax reporting.

A tax attorney is authorized to operate in a certain jurisdiction (state or states, for some attorneys). They assist people and businesses in legal situations involving issues such as unpaid back taxes and property liabilities. A tax attorney can act as a go-between for a client and the IRS, reducing fines and arranging payment conditions.

CPAs are accountants who helps clients maximize their assets while lowering their tax responsibilities. CPAs go through extensive business and financial training before becoming financial advisors. Individuals and corporations with more complex tax responsibilities, such as corporate finances, divorce and child support payments, or property holdings, might benefit from the assistance of a CPA.

We outline the fundamental distinctions between a tax attorney and a CPA in this article.

What is a Tax Attorney?

A tax attorney is a lawyer who has been versed in tax law and judicial decisions pertaining to taxation. To practice law as a tax attorney, one must first pass a state bar test. Tax attorneys are experts in defending clients in tax disputes that need legal action. They may also assist firms in complying with IRS standards in their state or across numerous locations if they operate in more than one state.

Tax attorneys can initiate lawsuits and represent clients in court since they are fully licensed to practice law. They may consult with courts and, on behalf of a client, contact the IRS directly.

What Does a Tax Attorney Do?

Any of the following responsibilities might be assigned to a tax attorney:

  • Negotiating a legal dispute in a tax issue for a client.

  • Documenting a client's financial records.

  • Defending a client on the basis of legal precedent and their specific circumstances.

  • Examining federal and state tax legislation.

  • Consulting with other legal specialists regarding a client's tax situation.

  • Managing and assisting in the execution of estates.

A four-year bachelor's degree, often in math, accounting, or business, is required to become a tax attorney. Then, in order to be admitted to a law school, candidates must pass the Law School Admission Test (LSAT). The LSAT assesses skills in areas such as reasoning, analysis, and reading comprehension that are relevant to a legal job. Even with a high LSAT score, law school applicants must typically go through a lengthy and demanding admissions process in order to be accepted.

What Does CPA Stand For?

A Certified Public Accountant, or a CPA, is in charge of preparing a variety of financial documents for both individuals and businesses, including tax returns. CPAs also serve as financial consultants, advising clients on matters such as investment holdings and tax concerns.

How to Become a CPA?

CPAs must pass an exam that certifies them to take on responsibilities beyond those of an accountant after receiving a bachelor's degree in accounting or a related discipline.

The requirements for becoming a CPA vary by state, but in most cases, an individual must:

  • Accumulate at least 150 hours of college study.

  • Pass the Uniform CPA Exam.

  • Obtain at least a year's worth of accounting experience. It will take one to two years in most states.

CPAs in all 50 states must pass all four portions of the CPA test in addition to their academic education:

  • Audit and attestation

  • Financial accounting and reporting

  • Regulation

  • Business environment and concepts

CPAs are licensed professional accountants who have passed the CPA test administered by the American Institute of Certified Public Accountants (AICPA). What is a CPA license? The American Institute of Certified Public Accountants (AICPA) offers resources on how to get CPA license and is issued by SBA. To administer the examination and provide the license, the American Institute for Certified Public Accountants (AICPA) collaborates with the National Association of State Boards of Accountancy (NASBA).

A CPA credential is one of the most known and trusted professional qualifications in the corporate sector because of this significant training and understanding. A CPA must also follow the AICPA Code of Professional Conduct, or their license will be revoked.

All of this study has resulted in a substantial knowledge foundation that qualifies CPAs as tax specialists. Their most valuable talent is maximizing your refund or lowering your obligation while staying within the confines of the law.

CPAs are qualified to submit reports with the Securities and Exchange Commission (SEC), which are necessary for firms that trade on the stock exchange. They can also conduct audits and examine financial data, with an emphasis on the accounting aspect of tax preparation.

What Does a CPA Do?

Aside from basic tax preparation, CPAs may frequently assist with:

  • Establishing your company as an LLC, corporation, charity, or other entity.

  • Examining personal and corporate finances.

  • Advising customers on how to get the most out of their tax deductions.

  • Working on improving a company's bookkeeping procedures.

  • Selecting the Best Health Insurance for You and Your Employees (if you are a business owner).

  • Obtaining a personal or corporate loan and fulfilling the necessary paperwork.

  • Assisting with long-term tax and financial planning, such as estate planning.

What is the Difference Between A CPA and A Tax Lawyer?

Although tax attorneys and CPAs both deal with tax matters, their primary responsibilities are vastly different. To better assist clients, a tax attorney learns and understands tax laws and keeps up with evolving requirements. Although most tax attorneys work for a law company, they can also practice independently.

CPAs frequently work on their own as the owner of a company, although other CPAs prefer to work for an accounting firm or a major organization. A CPA, unlike a tax attorney, will assist a client in filling out, preparing, and filing a tax return with the goal of simplifying complicated data from many sources. They are more concerned with the financial implications of tax liabilities than with the legal issues. CPAs are also qualified to do tasks other than tax preparation. They assist business clients in the creation of financial reports and the analysis of a company's financial records.

When to Hire a Tax Attorney?

When you find yourself in the following scenarios, you may choose to retain a tax attorney to act as your legal counsel and representative:

  • You're a person in a case where a revenue officer or tax agent is involved.

  • You owe back taxes that you haven't paid (often for multiple years).

  • You're being investigated for tax evasion.

  • Your tax return will be audited by a revenue officer.

  • Your property might be at verge of being confiscated.

  • You have to work out a deal with an IRS agent.

When to Hire a CPA?

In the following situations, CPA services may be beneficial:

  • You run a relatively small company.

  • Personal assets and business costs are combined.

  • You've gone through a separation.

  • You own a number of properties.

  • You've decided to sell your house or invest in a rental property.

  • You must certify a company's financial reporting.

When Should You Consult a Tax Attorney or a CPA?

Consider the tax situation at hand if you're on the fence about whether to engage a CPA or a tax attorney. Do you have to deal with complicated personal or corporate taxes and wish to reduce your tax bill? Choose a CPA. Are you having difficulties with the IRS, getting debt collection notifications, or dealing with a tax dispute? Engage the services of a tax attorney. If you need an attorney, don't save money by hiring a CPA. You'll just wind up in greater difficulty with the IRS, which might result in far more expensive losses than hiring a tax counsel.

However, anything beyond fairly simple tax returns should be handled by a qualified tax attorney. Many people believe that hiring a CPA to help them with their intricate tax concerns would save them money, but not employing the legal specialists can cost them a lot of money in the long run.

Tax attorneys are accustomed to working directly with the IRS and are familiar with the strategies that can help you reduce or even eliminate your tax bill. You may also plan for a smooth financial future by consulting with a reputable tax attorney before issue arises, anticipating and saving for any anticipated tax debts.

Of course, if you do wind up having to go to tax court for whatever reason, your tax attorney will be able to fiercely protect your interests before a judge. A CPA is unable to do so.

Look for The Appropriate Match

Whether you require the services of a CPA or a tax attorney, it is critical to locate the professional that will work well with you. If you're the recipient of a family trust or the owner of an LLC, for example, search for a CPA that has experience working with customers in relevant financial situations to yours. Make sure you understand what the CPA will expect of you and that you feel comfortable discussing your personal or business accounts with the CPA. You'll likely employ a CPA to work with you for a long time, so choose someone you can trust.

Look for someone who specializes in a field that corresponds to your requirements while looking for a tax attorney. When looking for a tax attorney, seek out someone who specializes in a field that corresponds to your requirements. Because of the complexity of tax law, many tax attorneys emphasize on a single area of specialty, therefore it's critical to inquire about their knowledge in those areas before hiring an attorney. You'll want to make sure you and the attorney can communicate successfully and that you have faith in their ability to complete the task.

Be Proactive in Your Approach

Whether you're considering hiring a CPA or a tax attorney, it's better to be proactive rather than reactive and wait for the issues to emerge. An informal meeting with a potential CPA or tax attorney to evaluate your requirements and identify your next steps.

Final Thoughts

CPAs and tax attorneys can both assist with tax planning, financial decisions, and avoiding tax penalties. CPAs may be more knowledgeable about the financial aspects of tax preparation, but an attorney can offer legal guidance in the event of difficulties or potential problems. If you need assistance with a tax defense case, hire an attorney. An attorney can also assist you in resolving situations involving significant tax debt and other complex issues.

Other reasons for choosing a CPA or tax attorney, in addition to the aforementioned distinctions, include availability, cost, and a personal connection. The greatest thing you can do is meet with a CPA and a tax attorney to discuss your circumstances and have them assist you in making the best decision for you.