"Tax attorneys offer one major benefit that a CPA does not — confidentiality."
Published by the American Academy of Attorney-CPAs
Whether you are seeking a professional to assist with tax issues on personal or business-related concerns, it can be difficult to determine exactly which expert best fits your needs; there are so many financial advising specializations with innumerable designations that it eventually seems to become a confusing jumble of letters on a business card.
It is easy to see why small businesses would benefit from hiring a dually-certified Attorney-CPA.
However, two of the most reliable and well-known professionals that can aid you with various tax problems are the tax attorney and the CPA, both of which offer different — though often overlapping — services.
Tax attorneys and CPAs can both assist with a variety of your tax needs, yet there are distinct limitations to what roles they can play on their own.
This is why hiring a dually-certified Attorney-CPA is the smarter way to go, as they can provide a more comprehensive level of service due to their background and education in both highly technical fields.
The role of a tax attorney
Tax attorneys are lawyers who have gone through law school, passed their state’s bar exam and emphasize tax issues in their practice.
Unlike CPAs, who are skilled in managing financial records and preparing tax returns, the tax attorney is more planning and dispute-oriented; meaning they are primarily trained to help minimize a business’ tax liability through the structuring of assets or to represent them through tax-related litigation.
While CPAs are authorized to represent clients in IRS disputes, they typically do not have the training or experience that a tax attorney would have when it comes to representing a client. If you are facing an audit with the potential for harsh penalties, a tax attorney would be the better choice due to their negotiation skills and intimate knowledge of legal principles and case law.
Tax attorneys also offer one major benefit that a CPA does not — confidentiality. Any information you provide your tax attorney is protected by client-attorney privilege, meaning they cannot be forced to testify against you.
This offers a distinct advantage if you are dealing with possible criminal charges from the IRS and you wish to prevent conversations with your tax expert from inadvertently being used against you.
The role of a CPA
CPAs dedicate their education — which is extensive — to a broad range of accounting fields. From auditing and taxation to bookkeeping and business strategy, CPAs are one of the most versatile financial planners available.
Considered the most trusted advisor in their industry, CPAs are a great choice for year-round financial recordkeeping and tax preparation; however, their diverse skillset and stringent education requirements sets them apart from other accounting professionals.
While a CPA is one of your best options when it comes to filling out those convoluted IRS forms come tax season, they can also serve as a principal advisor for many different financial decisions, including estate planning, investment and real estate advice, certain IRS problems and more.
However, one of the most beneficial services a CPA can offer is the ability to review or audit a business’ financial records to identify problem areas that need improvement, as well as where you are in good standing.
This can not only help you make better-informed business decisions, but also ensures you are in compliance with IRS regulations to help you avoid future tax penalties and can even help your business achieve better interest rates.
The benefits of a dually-certified professional
While a tax attorney is typically reserved for more specific and complex tax issues whereas the CPA is usually utilized on a more regular basis to keep your financial records in order and prepare your taxes, the advantages of having a two-in-one professional are hard to overstate.
Not only do dually-licensed Attorney-CPAs have the financial background to understand the intricate details of your company’s balance sheets, but they are also able to advise on business structure to reduce tax liabilities and hopefully help you avoid any trouble with the IRS.
However, should you ever run into any legal trouble regarding your tax filings, your dually-licensed Attorney-CPA would be well-equipped to represent you due to their knowledge of your business’ financial records and their litigation training.
Additionally, you may be able to save money in the long run by hiring one professional who has the knowledge and expertise to advise on both important business decisions while still preforming the routine tasks of keeping your finances running smoothly and ensuring your taxes are professionally filed.
With the improved value of a tax attorney and CPA rolled into one professional, it is easy to see why small businesses would benefit from hiring a dually-certified Attorney-CPA.