Why You Might Need A Tax Attorney Rather Than A CPA

Tax accountants are used by many businesses big and small, as well as individuals.  Another option which is quite a bit more expensive, is to use a tax attorney instead of an accountant.

This option won’t be available to most small businesses and individuals because of the higher cost but if a tax attorney fits into your budget then it might be worth consideration.

If you thinking about buying tax preparation software then consider software programs such as TurboTax or TurboTax Canada (formerly QuickTax).

Some advantages of using a tax attorney over an accountant

A tax attorney has attorney-client privilege which accountants do not have if you are facing a criminal tax case from the IRS.  Accountants also don’t have client privilege for state tax audits or an investigation by another federal agency even if they are not criminal cases.

If you owe back taxes you can’t pay or are seeking some sort of tax relief from the IRS then a tax attorney should be better qualified to deal with this sort of scenario rather than an accountant.

If you are facing a criminal action from the IRS or are planning to bring a suit against the IRS then a tax attorney is necessary.

Some disadvantages of using a tax attorney over an accountant

The main disadvantage is the cost.  The rates for tax attorneys and CPAs vary quite a bit so the best way to determine potential costs is to interview some attorneys and accountants and compare the costs directly.
If you are honest with your accounting then you shouldn’t have to worry about major problems with the IRS but sometimes paying more money for a tax attorney could be a form of insurance for your business.

Summary

Hiring a tax attorney vs a CPA is not a clear cut decision for a lot of firms and individuals.  If your taxes are very complicated, involve overseas law, have problems with the IRS then an attorney might be the best choice.  For most small businesses and individuals a good accountant will probably suffice.
Keep in mind of course that within any group of professionals there will be a large range of competancy so it is important to interview possible hires and check all references.