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Do You Need a Tax Attorney or CPA?

Jan 25, 2022
by Article City
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Originally Posted On: https://taxsaversonline.com/do-you-need-a-tax-attorney-or-cpa/

 

Do you need a tax attorney or CPA depends upon your business or personal tax or financial needs. Tax Attorneys and CPA’s both are expert in their own fields. While there might be some overlap in their expertise and skills both have different skillset that can help you in different ways.

While both of them can prepare tax returns and do research in tax related matters, The primary difference between the two is that, while a CPA holds expertise in Financial Audits, Financial Statement preparation and dealing with the financial implications of tax returns, a tax attorney specializes in handling the legal side of taxation

 

What is the difference between a CPA and Tax Attorney?

Reasons to Hire a Tax Attorney

There are many reasons to Hire a Tax Attorney. Tax Attorneys can highly trained experts in Tax Law and interpretation of the tax law.

  • Attorneys can provide Legal Opinion and Advice in writing
  • Definitely hire a Tax Attorney if you have Criminal Case or IRS is suspecting you of tax crimes
  • Tax Attorney can provide Representation in the tax court
  • If you owe Back Taxes that are way overdue and IRS is
  • If you have liens or levies due to unpaid taxes, Tax Attorneys can help either remove or stop Liens and Levy’s
  • Attorneys can help halt wage garnishments
  • Attorneys can negotiate with the IRS and do an offer in compromise
  • Lawyer can provide legal help with trusts or estates taxes

Reasons to Hire a CPA

There are several reason to hire a CPA. A Certified Public accountant is highly trained professional who has gone though extensive education, testing and training in order to achieve this highly desired certification.

They can offer advice that can truly help you financially. We have listed many reasons to hire a CPA:

  • Prepare and File Personal and Business Taxes
  • Prepare Compiled, Reviewed or Audited Financial Statements
  • CPA are good at detailed analysis of tax deductions and Tax credits you or your business may qualify for
  • Determining the right business structure in terms of tax consequences such as S Corp, C Corp, LLC or Sole Proprietorship.
  • Picking Right Accounting Method (Cash Basis vs Accrual Basis)
  • Represent your in case of an IRS, State or Local Govt Audit
  • Preparing financial Statements such as Profit and Loss, Balance Sheet and Cash Flow Statements
  • CPA can help with payroll preparation and filing payroll forms with IRS and State
  • Help prepare business plans, budgets and overall Financial planning
  • Help you understand how a particular law applies to your tax situation
  • Help with due diligence when you are Acquiring a business, Merging with another company
  • Help understand tax consequences when you are selling a business or a real estate property.
  • Provide Forensic Audit or accounting services in order to prevent fraud or discover fraud.

 

What’s better CPA or Tax Attorney?

While Tax Attorney is better when dealing with IRS especially in criminal matters or tax evasion matters, a CPA will be better when dealing with Financial Statement Audits, analysis or tax preparation matters.
Both have different skillset that can help you personally or your business in different ways. Hence, depending upon your needs you need to pick a professional that can help you with a particular need such as Audit representation or Financial Statement Audit.

Why Might You Seek the Help of a Tax Attorney Rather than a CPA?

Whether you need a Tax Attorney rather than a CPA is important when you are getting audited and when you looking for clarification on a complicated tax matter or tax treaty.

Whether to hire a tax attorney or a CPA can make a huge difference in the outcome  of an audit especially if there are concerns that you may have filed a “false return” or be involved in tax evasion that can result in criminal tax matters.

In Tax Evasion or tax crime matters, it is imperative that you retain the services of a tax attorney (instead of a CPA) to protect your communication under the Attorney Client Privilege.

Attorney Client Privilege protects any communication you have with your attorney and this cannot be used against you or to build a criminal case against you.

CPA and EA can be forced by the court hence you don’t want to disclose any information to them that can be used against you in a case of a criminal proceeding.

Even if you’re not facing criminal proceeding, retaining an attorney to represent in case of an audit before the IRS or State/ local taxing authorities can be beneficial because an attorney can make sure you don’t answer any questions that may result in criminal proceeding later.

Tax Attorney will make sure your rights are properly protected and IRS auditors are not pushing you provide any info that may harm your defense later.

When an Audit results in substantial liability, Tax Attorney is already familiar with the case and the facts and can help represent you cost effectively as they already have all pertinent information related to your audit.

Is a Tax Attorney Worth it?

Tax Attorneys are definitely worth it especially if you have a large amount of taxes due or your are facing a prosecution from IRS or State Government for Tax Evasion or Tax Fraud.

Tax Attorneys typically charge a flat fee and can typically reduce your tax bill by over 70%.

Savings Example

Tax Attorney Fee $10,000

Tax Due   $100,000

After negotiation Tax Amount due $30,000

Total Savings $70,000 Minus Attorney Fee 10,000

Net Total Tax Savings $60,000

Tip: Tax Attorney may even help you make tax payments that you can pay over time helping you and your business with cash flow.

Can CPA give Tax Advice?

Yes, CPA can provide you Tax Advice. CPA are highly credentials and pass a extremely difficult tax and business law exam that help them prepare to provide accurate Tax Advice.
Furthermore, All CPAs are required to take professional continuing education to stay on top of tax Law changes so they can provide you Tax Advice and help prepare your taxes accurately.

Do CPA know Tax Law?

Yes, CPA do know the tax law and knows how to research to get you accurate answers. CPA are highly credentials and pass a extremely difficult tax and business law exam that help them understand and interpret the tax law.
Furthermore, All CPAs are required to take professional continuing education(CPE) to stay on top of tax Law changes so they can provide you Tax Law Interpretation and help prepare your taxes accurately.

Can a CPA Negotiate With The IRS?

Yes CPA can negotiate with IRS on your behalf. CPA, EA and Tax Attorneys are three of the circular 230 professionals that can commonly known to negotiate with IRS on your behalf. Once you get to a Tax Court, that when you will need a Tax Attorney to take over the case.

How difficult is Tax Law?

Tax Law is Very Difficult and Ever Changing. What makes is difficult is that its quite dynamics. New laws are passing each year and thousands of lines of tax code and exceptions to the tax code are being implemented every year.

So, if something was deductible last year, that may or may not be a write off this year as the law may change it or the amount of deduction may change as well.

Do Tax Lawyers Go to Court?

Yes. Tax Lawyers do go to court if it is required. Many times it can be done remotely via phone or video conferences especially during the health crisis.
Tax Attorneys can get most of the work done remotely as long as they have a power of attorney 2848 from you.

What does a Tax Attorney Do?

Tax Attorneys can highly trained experts in Tax Law and interpretation of the tax law.

Tax Attorneys provide various services to individuals and businesses.

  • Attorneys do provide Legal Opinion and Advice in writing
  • Tax Attorneys help represent you if you have Criminal Case or IRS is suspecting you of tax crimes
  • Tax Attorney can provide Representation in the tax court
  • If you owe Back Taxes that are way overdue and IRS is
  • If you have liens or levies due to unpaid taxes, Tax Attorneys can help either remove or stop Liens and Levy’s
  • Attorneys do help halt wage garnishments
  • Attorneys can help negotiate with the IRS and do an offer in compromise
  • Lawyer do provide legal help with trusts or estates taxes

How much does a CPA cost?

Average going Rate for a CPA is $150 to $200 Dollar per hour. Most CPAs either charge by the hour or Flat fee for preparation of the return or financial statement. But expect to pay about $150 to $200 per hour when you hire a licensed CPA who has decent experience under his belt.

How much do Tax Attorneys Cost?

Tax Attorneys charge about $350 to $450 Per hour on average based on type of work. Many charge flat amounts to resolve a particular issue.
You can decide which one is better for you hourly or flat based on your budget and type of tax problem you may be facing.

 

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