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The Difference Between a CPA and a Tax Lawyer

There is a lot of confusion around taxation, tax law, and accountancy for those who are unfamiliar and uncertain about where to go with financial or tax problems. In general, a Tax Lawyer has the same knowledge as a CPA, however, a CPA does not have the same knowledge as a Tax Lawyer. In some cases, the roles these individuals play can overlap - but in many areas, these professionals have distinct roles and their expertise is exceptional in their given fields. In this post, the tax lawyers at GETATAXLAWYER.COM explain some of the differences between Tax Lawyers and CPAs, as well as the benefits of using a Tax Lawyer.

Tax Lawyer vs. CPA

One clear distinction between a certified public accountant (CPA) and a tax attorney is right there in the name: attorney. For many non-legal and non-financial people, this distinction may not immediately mean much. When you have a lien filed against you or owe money to the IRS, it is not an accounting issue - it is a legal issue.

~ Tax lawyers are required to pass the bar exam in their state and maintain certification as a licensed attorney. A high level of training and understanding in the law is a must.

~ Alongside a grasp of what the law is, attorneys have training in how to counsel their clients, how to handle problems with government agencies and law enforcement, and how to appear before a judge and advocate for your position.

~ A tax attorney can help you devise estate planning strategies and handle the paperwork involved in minimizing estate taxes, transferring assets to family members, setting up trusts and other tactics.

~ If you have a tax dispute; want to sue the IRS, the state or a local tax authority over a tax matter; or if you want a hearing before the U.S. Tax Court, a tax attorney can help.

~ If you have an outstanding balance with the IRS or other tax authority that you want to negotiate or contest, a tax attorney may be able to help you pursue options such as:

  • Offer in Compromise
  • Innocent spouse relief
  • Installment plans to pay tax bills over time
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CPAs (Certified Public Accountants), on the other hand, are accountants. This means they are trained in accountancy – tracking and projecting expenses and budgeting.

~ Many CPAs focus their practice on taxes, and this makes sense; the vast majority of taxation and filing taxes is accounting for income and expenses, then relaying this info to the IRS.

~ However, CPAs are not always trained in what the law is, and may not always have your best interests at heart.

This is by no means intended to disparage CPAs. In many instances in taxation, accountants have similar training to tax attorneys. CPAs are required to go to college, and must pass a CPA test to be certified. In fact, many CPAs go on to get special training and education, including masters degrees (typically an M.S.) in taxation. However, these degrees, as well as an LLM in taxation (“Master of Laws” degree) are also available to attorneys.

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Advantages of Hiring a Tax Lawyer for Tax Issues

Without a legal background, CPAs may not have the proper training to find tax breaks, and may not have the skills and education to justify these breaks if the IRS comes knocking. Additionally, when you work with an attorney, you have multiple protections to keep your privacy and avoid being taken advantage of, such as:

~ Attorney-Client Privilege: While CPAs must keep your information confidential, courts can still order them to give up information of your accounts and financial records. On the other hand, all discussions regarding legal advice between a client and their lawyer are private, and cannot be reached by a court. This is known as “privilege,” and is stronger than “confidentiality” – and it is not always available with accountants.

~ Legal Ethics Rules: Lawyers have rules that they must follow in order to keep their license to practice. Many of these ethics rules deal with advocating for your client’s best interests, keeping them informed of their choices, and avoiding additional issues. CPAs have ethics rules, too, but they are not as strong as those for lawyers.

~ Conflicts of Interest: If you use a CPA for tax services and the IRS eventually audits or investigates you, the CPA may need to protect him- or herself during the investigation. This may put your CPA against you. Attorneys have a duty of loyalty to current and former clients, and cannot violate privilege or confidentiality to protect themselves.

~ Representation: Lawyers are the only ones authorized to represent clients in court, and that ability to represent extends beyond the courtroom to government investigations, IRS audits, and negotiations. A CPA may be able to represent you in financial situations and even before the IRS during an audit, but they cannot stand up and advocate for your interests in court without being a lawyer.

It Depends on What Your Needs Are...

Both attorneys and CPAs can help you file and plan your taxes. But, if you need advice on what the law says, need representation during a difficult time, or have come across legal issues because of a CPA’s advice, you may need a tax attorney. However, if you need accountancy or bookkeeping advice, you can also reach out to GETATAXLAWYER.COM who has their own team of Tax Preparers who can assist you.

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