Tax Attorney vs. CPA vs. Enrolled Agent

Tax Attorney vs. CPA vs. Enrolled Agent

If you need assistance dealing with a tax matter, should you consult a tax attorney, a certified public accountant (CPA), or an enrolled agent? The right answer depends on the situation, but this post will help you understand the differences between these pros. The good news is that Timothy S Hart is both a Tax Attorney and CPA, and has a Master’s Degree in Taxation.

In short, a tax attorney specializes in tax law and is authorized to represent clients in the U.S. Tax Court. CPAs are accounting experts and provide financial services that include, among others, tax planning and support. Enrolled agents are tax practitioners with the federal authority to represent taxpayers when dealing with the Internal Revenue Service (IRS).

In this post, Timothy S. Hart Law Group, P.C. discusses the similarities and differences between a tax attorney, CPA, and enrolled agent. Learn more about these professionals’ education and the specific tax services they provide. Or contact us today to get help now.

Tax Attorneys

A tax attorney is a legal professional with tax law expertise. In addition to representing clients’ interests in IRS communications, a tax attorney can provide legal representation in the U.S. Tax Court. Someone who is not an attorney can only provide court representation if they have passed the Tax Court Examination for Non-Attorneys.

Attorney-client privilege is a crucial difference between tax attorneys and other professionals. The attorney-client privilege protects the confidential communication between an attorney and their clients. Most clients feel more at ease since what they say to an attorney can’t be used against them.

For example, if you are facing a criminal charge as a taxpayer, the IRS or a state tax agency cannot compel your attorney to testify against you. CPAs and enrolled agents do not provide this level of protection. In some cases, lawyers operating as tax resolution firms and who use the designation of attorney also do not provide attorney-client privilege. At our firm we are licensed attorneys operating as a law firm, so you have the protection you need. so Ask your attorney if you’re unsure.

Tax Attorney Training and Education

Before someone can qualify as a tax attorney, they must complete a four-year bachelor’s degree and then pass the Law School Admissions Test (LSAT). Law school candidates who achieve a sufficient LSAT score and pass the rigorous admissions process can then proceed with a Juris Doctor degree, which takes around three years to complete.

Upon completion of the J.D. degree, graduates must pass the bar exam in their state, in which case they qualify as lawyers. In many cases, tax attorneys also obtained advanced degrees in tax law.

Maintaining active bar membership requires ongoing legal education. Before a lawyer can market themselves as a tax attorney, they must adhere to their state bar association’s regulations. Failing to do so can result in the revocation of their license to practice law.

Main Services You Would Hire a Tax Lawyer For

A tax attorney’s services fall under the following categories: tax controversy and tax resolution (such as offers in compromise, and payment plans.

Tax Controversy

Attorneys providing services relating to tax controversy have extensive knowledge of the workings and regulations of the IRS and state revenue agencies. These tax professionals can assist and represent clients with tax debt relief, collections, appeals, and audits.

If you owe a significant amount in back taxes, face a lien or bank levy, or want to stop a wage garnishment, you should consult a tax attorney who deals with tax controversy. Hiring a tax lawyer is also your best option if you have received an IRS notice, such as an LT-11 (Intent to Levy and Notice of Your Right to a Hearing) or CP505 (Notice of Intent to Levy). A tax lawyer will evaluate your case, provide legal advice, and respond to these notices on your behalf.

Suppose a CPA or enrolled agent prepared your tax returns, and there are discrepancies between the return and financial records, or there are classified transactions. In that case, attorney-client privilege creates a separation between your legal representative and the return preparer. As a result, a tax lawyer can explore various options in dealing with the IRS on your behalf.

Foreign Bank accounts

Foreign asset reporting services involve formulating strategies to manage the tax implications of often complex situations involving unreported foreign accounts. A tax attorney who handles this issue can assist in structuring and documenting a solution to this problem, and these attorneys also have the authority to represent clients before tax agencies, including the IRS.

Hiring a tax attorney specializing in foreign asset reporting is ideal if you are involved in international transactions relating to tax treaty issues, international bank accounts, and foreign tax credits.

These tax professionals also have insight into mergers and acquisitions. When buying or selling a business, a transactional tax planning attorney can assist in formulating strategies and negotiating a business plan that mitigates risk.

Certified Public Accountants

CPAs are state-licensed accountants providing various accounting and financial management services, including tax functions. Like other tax professionals, CPAs can represent clients before any IRS office, and they can take on any tax matter.

However, a CPA does not have the authority to represent a taxpayer before the U.S. Tax Court. Additionally, most CPAs do not take on clients facing criminal charges unless an attorney represents them.

CPA Training and Education

A CPA’s education starts with a bachelor’s degree that must include coursework of at least 150 credit hours. To reach that number of credit hours, most CPA candidates also complete a master’s degree.

If a graduate does not major in business or accounting, they must complete additional credits before they can sit for the CPA exam. The exact requirements vary from state to state, but in New York, the Board of Accountancy’s education requirements include:

  • 1. Financial accounting at the upper division level
  • 2. Taxation
  • 3. Cost or management accounting
  • 4. Audit and attestation at the upper division level

The American Institute of Certified Public Accountants issues the CPA exam, which consists of four tests that candidates must complete within 18 months. After passing the CPA exam, candidates can apply for licensure, provided that they meet their state account board’s requirements. These requirements include passing an ethics exam and obtaining one or two years of professional working experience.

A licensed CPA must renew their license every one to two years. Additionally, CPAs must participate in ongoing training and education to maintain their certification for representation before government agencies and tax return preparation.

Main Services You Would Hire a CPA For

A CPA is not a one-size-fits-all solution as they often focus on a specific service, such as tax preparation, tax planning, business structuring, and the purchase and sale of businesses. As a result, you need to find a CPA specializing in the tax service you need.

Aside from representing a client in the U.S. Tax Court, a CPA can provide the same tax services as an attorney. CPAs’ everyday taxation services include:

  • 1. Preparing tax returns for individuals or businesses.
  • 2. Filing past-due returns.
  • 3. Assisting with estimated tax payments and becoming current with your taxes.
  • 4. Providing insight regarding financial and asset management.

As mentioned above, Timothy S Hart, ESQ. is also a CPA.

However, suppose you have overwhelming tax debt and want to submit an Offer in Compromise, a settlement agreement with the IRS. In that case, a tax attorney is the professional to contact, as CPAs usually do not have extensive experience negotiating with the IRS. That said, some CPAs do have a lot of experience with these tasks. Again, it’s critical to find a tax pro with the experience you need.

Enrolled Agents

An enrolled agent is a tax professional authorized by the U.S. Department of the Treasury as a tax practitioner (mostly to prepare simple tax returns and perform bookkeeping tasks). Like a tax attorney and CPA, an enrolled agent has unrestricted practice rights and can represent a taxpayer before the IRS when dealing with tax appeals, audits, or back tax collection.

An enrolled agent can also prepare tax returns for individuals, estates, and business entities. Some enrolled agents offer bookkeeping services to individuals and businesses.

Enrolled Agent Training and Education

The enrolled agent certification process is significantly more straightforward than the process to become an attorney and CPA. To qualify as an enrolled agent, candidates must:

  • 1. Apply for a preparer tax identification number
  • 2. Pass all three sections of the enrolled agent certification exam.
  • 3. Submit application to the IRS
  • 4. Pass background check

The enrolled agent license is a federal recognition, which means requirements do not vary by state. The three-part certification exam includes the following sections:

  • 1. Tax Code for Individuals
  • 2. Tax Code for Businesses
  • 3. Representation, Practice, and Procedures

Applicants do not need to meet any education or experience requirements to sit for the certification exam. However, some enrolled agents hold degrees in accounting or relevant subjects to differentiate themselves from their peers. Also, note that if you work for the IRS for five years in certain roles, you can get the EA designation that way.

Main Services You Would Hire an Enrolled Agent For

Due to the low licensing requirements, enrolled agents’ services are generally more affordable than those of CPAs and tax attorneys. Going with an enrolled agent is likely the most cost-effective option if you have a straightforward tax situation and need a basic service, such as tax return preparation and filing.

If you owe a small amount in back taxes (under $10,000), an enrolled agent can help you request a penalty abatement or installment agreement. However, if your tax situation is overly complex, you likely need the expertise that a CPA brings to the table. Similarly, consult a tax attorney if a tax issue can result in collection action, a criminal investigation, or substantial costs in the form of penalties and interest.

Choosing the Right Professional for Your Situation

Tax attorneys, CPAs, and enrolled agents are similar. However, tax attorneys are the only tax professionals who can represent taxpayers in the U.S. Tax Court, and are given respect by the IRS and state taxing authorities.

Additionally, attorney-client privilege applies to tax attorney’s services, which means communication between you and your lawyer cannot serve as evidence against you. But, when working with a CPA or enrolled agent, you do not have this protection.

However, while these professionals have no legal restrictions on the tax matters they can take on, they typically do not do everything for everyone. Also, your budget should not be the only consideration when looking for a tax professional. Consider experience, relevant education, and your unique situation before partnering with a tax professional.

Contact Us for A Personalized Tax Solution

As a tax attorney and CPA, Timothy Hart offers a comprehensive range of tax services. Whether you are facing an IRS audit, overwhelming tax debt, or an investigation for tax fraud or evasion, we at Timothy S. Hart Law Group, P.C. can help. If you have unfiled tax returns, we can help you become compliant by preparing the tax returns and minimize your penalties by seeking relief or filing a voluntary disclosure.

We understand that tax problems can be stressful and affect every aspect of your life, which is why we deliver personalized attention to our clients’ unique tax problems. Do not allow your tax problems to affect your financial stability and quality of life. To get help now, contact us today to schedule an initial consultation.

Attorney Timothy Hart

Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]