When it comes to getting help with your taxes, there are a variety of options you can turn to depending on your needs and budget. Two of the options are CPAs (Certified Public Accountants) and tax lawyers. When should you consult a tax lawyer versus a CPA?
Let’s start by looking at what a CPA is. CPAs are professionals trained in a variety of accounting-related areas, one of which is tax. They are authorized to represent clients in front of the IRS. The requirements for becoming a CPA vary by state but include completing 150 hours of college or graduate level work and passing a qualifying exam. A CPA is a solid choice to help you keep good records throughout the year and to do your taxes.
A tax lawyer is someone who has completed law school, passed the bar exam, and has specialized in tax-related work. Legal education is focused heavily on disputes; so, while both a CPA and tax lawyer can represent you before the IRS, a tax lawyer’s training is particularly helpful if you get into a tussle with the tax authorities and are facing penalties. CPAs can help in disputes as well, but they aren’t necessarily as well versed in the minutia of the law, and they’re not trained to make an argument the same way lawyers are. Another area where tax lawyers can be particularly helpful is tax planning — advising you on how to structure your assets in a way that minimizes your tax liability. On the flip side, tax lawyers aren’t trained in bookkeeping or tax filings, so if that’s the extent of your needs, you may be better off going with a CPA.
Legal education is focused heavily on disputes; so, while both a CPA and tax lawyer can represent you before the IRS, a tax lawyer’s training is geared toward helping if you get into a tussle with the tax authorities and are facing penalties.
Cost is another factor to consider. Tax lawyers are almost always more expensive than CPAs, although it’s possible to find attorneys whose rates are competitive with those of CPAs. If you’re on a budget and you just need help with doing your taxes, consider working with an Enrolled Agent, or EA. EAs have passed a three-part, comprehensive IRS exam covering individual and business returns. They must adhere to ethical standards and complete 72 hours of continuing education courses every three years. Similar to CPAs, EAs are authorized to represent you before the IRS, but unlike CPAs, they focus specifically on tax work rather than the broader portfolio of expertise that the CPA brings to the table.
“Tax preparers” are another option. While they are required to register with the IRS, in most states tax preparers are not subject to any type of credentialing. The upside is that tax preparers are usually the most inexpensive category of tax professional. The downside is that there’s a wide range of quality among tax preparers. If you hire one, be sure to do your homework first.
In fact, regardless of what type of tax professional you end up deciding to work with, do your research. Look at their credentials, how much experience they have, and try to get references.