Tax Attorney Versus CPA

What is a CPA?

Certified Public Accountants, or CPAs, are accountants who have an additional specialization in tax laws. Some CPAs work in corporate environments, performing accounting services for businesses, while others work with the public.

For the public, CPAs provide services such as:

• Preparing financial statements
• Preparing tax returns
• Bookkeeping and payroll for small businesses
• Financial forecasting
• Representing clients to the state or IRS in tax matters
• Assisting with some areas of financial planning

While CPAs can represent you with the IRS if you need assistance with tax issues, they can not represent you in court.

Tax attorney J. Anton Collins at Tax Law Offices in Naperville, Illinois, said: “CPAs are specifically trained to emphasize compliance and planning. They work on tax returns, financial records and provide guidance to help people and businesses make well-informed decisions with a thorough knowledge of the tax implications.”

CPAs can also help with financial planning, especially in the areas of tax planning. They may suggest savings options such as Roth IRAs versus traditional IRAs, or help a business set up an employee retirement plan. But they don’t advise clients on investment planning, such as asset allocation or risk management.

How to become a CPA

CPAs will have at least a bachelor’s degree, and some states require an additional 30 hours of credit, which means many people choose to get their master's degree. Every state also has a work requirement, where the CPA candidate must work under a licensed CPA for a period of years. Exactly how long will depend on the state.

Once the education and work requirements are met, the CPA candidate can sit for the CPA exam. After the candidate passes the CPA exam, they must apply for a license with the state. After approval, this license must be maintained by completing the required amount of continuing education courses.

What is a tax attorney?

Tax attorneys are lawyers who specialize in tax law. They represent their clients during negotiations with the IRS during tax disputes and are experts in the tax code.

Tax attorneys can provide the following services:

• Resolve tax disputes with the state and IRS
• Draft legal documents, such as wills with complex tax consequences
• Provide tax-related advice to clients

For example, a tax attorney can help you negotiate your tax debt with an offer in compromise or represent you in court if the IRS accuses you of fraud.

Collins said: “Tax lawyers manage IRS appeals, collection activities and court proceedings, and they counsel clients on cases where intent or legal liability is a factor. The privilege pertaining to upholding the confidentiality of communications between a tax attorney and client can often be invaluable at delicate times.”

Unlike a CPA, a tax attorney won’t file your taxes or perform accounting work.

How to become a tax attorney

Tax attorneys must have a bachelor’s degree, typically in accounting, business, taxation or pre-law. They then must attend law school and pass the bar exam. Either during or after law school, they must specialize in taxes. Typically, to specialize, they either get a master’s degree in taxation or become a CPA.

Once a tax attorney begins working, they can specialize even further in a particular area, such as international tax law or estate planning.

When to hire a CPA versus a tax attorney

Both CPAs and tax attorneys can help you resolve issues with the IRS. Each role has its own unique areas of expertise.

When to hire a CPA

You may want to hire a CPA if your taxes are complicated and you need your tax return prepared. Or you want advice on how to maximize deductions and credits.

You may also reach out to a CPA if you’re starting a business and want advice about which legal entity to choose, such as starting an LLC or S-Corp.

According to Brian Zink, founder of No Upfront Tax Relief, individuals and small businesses typically use CPAs for general tax needs. “CPAs will generally handle routine tax preparation, maintaining compliance, bookkeeping, and financial planning,” he said. “If the tax situation includes filing returns, managing finances, or developing a plan to reduce future tax liability, then a CPA can handle it.”

If you’re going through a major life change, a CPA can advise you on how it will affect your taxes and suggest ways to optimize your finances. Major life changes can include:

• Getting married or divorced
• Moving
• Having a baby
• Buying or selling a home
• Major change in income
• Retiring
• Receiving an inheritance or other windfall

You may also want to seek out a CPA if you owe back taxes or have other issues with the IRS. A CPA can speak to the IRS on your behalf. While they can’t represent you in court, most tax issues don’t end in court.

Also, if you have a complicated estate, a CPA can help you plan your estate to minimize taxes upon your passing.

» MORE: Best tax relief companies

When to hire a tax attorney

You can hire a tax attorney to advise you on complex tax planning. For example, if you’re moving to another country while freelancing in the U.S., you may want a tax attorney to advise you on the best way to set up your affairs.

If you receive a letter from the IRS about an audit or other issue, you may want to hire a tax attorney, especially if you’re concerned about a tax dispute. Since a tax attorney can represent you in court, they can be a good choice for complicated tax matters that may escalate.

“Tax attorneys are necessary in situations involving legal issues including IRS collections, liens, levies, audits involving potential penalties, or when there are allegations of fraud or tax evasion,” Zink said.

He continued, “Legal representation is important in high-risk situations.”

Tax attorneys can also help with tax debt. If you have significant tax debt, a tax attorney may be able to help you negotiate with the IRS or advise you of your rights if you are facing levies from the IRS.

Education and training comparison

Both CPAs and tax attorneys are experts in taxes. The difference is that CPAs are experts in the tax laws as they apply to tax returns, tax planning and businesses. Tax attorneys are lawyers who represent clients on legal matters regarding taxes.

Career outlook and salary

Both CPAs and tax attorneys earn high incomes and have strong career outlooks over the next decade.

The average salary for a CPA is $84,139, according to Payscale. Entry-level CPAs typically earn about $62,000, while the most experienced earn around $102,000. According to the Bureau of Labor Statistics, accountant jobs are expected to grow 5% between 2024 and 2034.

The average salary for a tax attorney is $134,000, according to ZipRecruiter, with the majority earning between $83,000 and $158,000. According to the Bureau of Labor Statistics, lawyers in general are expected to grow 4% between 2024 and 2034. Loyola Law School states that 90% of its tax law graduates are employed within nine months of graduation. 

» DISCOVER: How much does tax relief cost?