CPA vs Tax Attorney - Understanding the Difference

If you want your taxes managed by a top professional, you might be considering a certified public accountant (CPA) or a tax attorney. The question is, which one do you choose? The answer depends on your tax situation and what goal you’re trying to achieve as a taxpayer. The main difference between a CPA and a tax attorney is that a CPA helps you prevent legal trouble while a tax attorney helps you rectify legal trouble.

A CPA is a top-tier accountant with a five-year business degree and a minimum of 150 hours of education. Only professionals who complete the CPA exam and satisfy exhaustive continuing education requirements qualify for a CPA license. While many CPAs work for accountancy firms, many others become CFOs, financial planners, and business consultants. CPAs are great for personal and business tax services because they’re far more knowledgeable than standard accountants and they’re authorized to resolve tax audits with the IRS on behalf of their clients. A standard accountant cannot do this. 

A tax attorney is a legal professional who has passed their state’s rigorous bar exam. They specialize in the legal complexities of tax preparation, including the requirements and restrictions of various deductions, the rights of taxpayers in the event of a lien or levy, and how to negotiate a compromise with the IRS. They can assist with processing unfiled returns, settling back taxes, halting wage garnishment, and similar issues. 

The Cost of a CPA vs Tax Attorney

If you’re just looking to minimize your tax liability and get the maximum benefit, a CPA can be a much more cost-effective option. 

A tax attorney will charge an average of $200 to $400 per hour depending on their experience in the field and your reasons for inquiring. Some attorneys will charge a flat rate, but this can be steep as well. For instance, if you’re inquiring about a tax audit, you can expect to pay anywhere from $3,000 to $5,000 or more when it’s all said and done. For an IRS tax appeal, you might pay north of $5,000. 

A CPA can typically offer their services for much less, especially when you consider what you’re actually getting. Whereas a tax lawyer often will impose a hefty fee for one primary service, our team of Los Angeles CPA professionals charge just a monthly modest fee that includes a full breadth of daily, monthly, and annual accounting and tax work. 

Should I Hire a CPA or a Tax Attorney? 

A certified public accountant is ideal for anyone with a unique tax situation. They can help you to secure the maximum tax benefit by utilizing credits, deductions, and forms that your average accountant is ill-equipped to manage. You may benefit from the help of a CPA if: 

• You own a business 

• You are a high-net-worth individual

• You have multiple streams of income

• You manage an investment portfolio 

• You’re responsible for quarterly taxes 

• You don’t work a traditional 9-to-5 job 

• You are recently divorced

• You require supplementary services like bookkeeping, day-to-day accounting, or investment advice 

• You want to build a lasting relationship with a tax professional complete with long-term financial planning 

A tax attorney is ideal for anyone who needs to address an important legal tax matter. The important thing, though, is to choose an attorney who specializes in your unique issue. For instance, some tax lawyers specialize in trusts and estates while others specialize in corporate tax concerns. 

You may benefit from the help of a tax attorney if:

• You’re facing a tax audit with criminal implications

• The IRS is investigating you for tax evasion or fraud 

• You’re trying to stop a wage garnishment 

• You’re facing a lien or a levy

• You need help with settling back taxes 

• You need to account for unfiled tax returns 

• You want to negotiate a compromise with the IRS 

• You’re leaving a lot of money to loved ones 

• You require tax-related legal counsel for a new business venture 

• You need assistance with international tax treatment 

Should I Have Both a CPA and a Tax Attorney? 

There are certain instances in which you may require both types of tax professional. It’s especially common for high-net-worth individuals to have both a CPA and a tax attorney—the CPA handles the day-to-day accounting and tax preparation while the tax attorney focuses on legal compliance and settling disputes. 

Most often, your CPA will be with you every year at tax time and possibly throughout the year if you rely on them for accounting or financial planning services. A tax attorney, though, will usually serve a specific, short-term purpose—like establishing an estate plan or resolving back taxes. 

Most businesses and individuals won’t need a dedicated tax attorney or retainer unless their taxes are monumentally complex. 

Why Most Taxpayers Choose a CPA Over a Tax Attorney 

It pays to have a professional manage your taxes. But while CPAs and tax attorneys are both highly educated and adept in resolving tax controversies and disputes, most taxpayers will choose a CPA. 

A qualified CPA can help you with all of your essential tax needs from maximizing your deductions to beating an audit. As long as you don’t have pressing legal issues in need of resolution, a CPA is usually the way to go. 

Or, to put it more simply: Tax attorneys are there to help you resolve serious tax issues; a CPA can help you to prevent those types of issues from occurring in the first place.