It’s relatively common to hear tax clients considering whether to partner with a Certified Public Accountant (CPA) or a tax attorney, as if the two professionals are competing against each other for a client’s business.
The truth is, CPAs and tax attorneys have a number of differences that set their services apart. There’s one key difference that defines a client’s relationship with each professional, and for this major reason, both CPAs and tax attorneys should (and often do) feel confident recommending that their client connect with the other.
As a CPA, one of the best tools you can have in your back pocket is a trusted relationship with a reputable tax attorney. This partnership enables you to better serve your clients, retain profitable clients long term, and keep yourself legally protected. The partnership can even win you new clients, as a tax attorney can leverage a strong relationship with a reliable CPA to refer their clients for services outside of legal tax support.
In other words, referring your client to a tax attorney is a good way to protect yourself from a client’s potential legal conundrum without ruining your existing relationship. A trusted tax attorney can also be a great source of referrals for you, when their clients need tax assistance outside of their services.
Here’s why a tax attorney is a CPAs secret weapon for ongoing client relationships, and how you can build a mutually beneficial relationship with a tax attorney in your area.
The Key Difference Between CPAs and Tax Attorneys That Shows Why Clients Need Both
Your clients may understand that CPAs give accounting advice while tax attorneys give legal advice, but they may be missing the crucial distinction: Only tax attorneys can defend clients in the U.S. District Courts and provide a legal opinion justifying the client’s position on a return. Additionally, only tax attorneys have an attorney-client privilege that protects communications between a client and an attorney, which can restrict IRS and California State tax agencies from discovering information provided to attorneys.
However, if a tax attorney takes on more of an accounting role and signs on as the tax-preparer, they’re actually waiving that privilege.
It is far more beneficial for your clients to have separate professional support for tax preparation and legal tax matters, rather than attempting to have their CPA or their tax attorney cover all of their tax needs.
As a CPA, you are likely your client’s first point of contact for tax planning. It’s in your — and your client’s — best interests for you to direct them to a capable tax attorney for any legal questions they have. Similarly, it is in the tax attorney’s best interest to work with a CPA to ensure client-attorney privilege is maintained, and that their client is getting all of the advice, planning, and protection available to them.
This is why a trusted tax attorney is one of the best tools any CPA can have to best serve their clients. Here’s how you can build up a reliable working relationship with a tax attorney you trust.
Building Mutually Beneficial Relationship with Tax Attorneys
Network With Like-Minded Tax Attorneys
Reach out to tax attorneys in your area, to get to know them better. Whether through networking events or even seeking them out individually to offer tax services, don’t be shy about sharing your thoughts and values, and seeing if you click with someone. It’s easier to work with people you have a good rapport with, so invest some time into building professional relationships. You may find a tax attorney whose perspective and working style fits nicely with yours.
Honesty is one of the most important building blocks when forming a mutually beneficial partnership. A tax attorney doesn’t want to be left in the dark, and neither do you. Aim for as much transparency and clear communication as possible from the start, to ensure everyone understands what’s going on at any given point. Be honest with the boundaries you’d like to set for the professional relationship, what you expect from them, and what they can expect from you.
Share Your Expertise
Tax attorneys may have a stronger understanding of legal matters, but CPAs have a much broader understanding of accounting as a whole. Be generous with your expertise and share it with the tax attorneys you engage with. It will help them understand your role better, and better identify when to send a client your way and when not to. Explain to them the characteristics and needs of your ideal client, to help them hone their referrals; and ask for the same from them, so you can identify when to refer a client to them. When you have a good understanding of a tax attorney’s expertise, and they have a good understanding of yours, your clients will get better service on both ends.
Refer Clients to Your Network
Once you’ve started building a network of tax attorneys that you know and trust, start referring clients to the ones that are best suited to their needs. This might involve a little professional matchmaking, and your recommendations should be based on the clients’ best interests. Don’t be afraid to give the tax attorney a heads up that you’re sending someone their way. Before you know it, they may begin doing the same for you.
Stay On the Same Page
Whenever you’re working with another professional, it’s important that everyone is on the same page. Before anything else, ensure that you secure your clients’ consent to release their information, so any requests for records and paperwork go quickly and smoothly.
Whether you simply want your clients to experience more robust service, or you have specific legal concerns about a client and want to make sure you’re protected, partnering with a tax attorney is one of the best ways CPAs can serve their clients. It’s the kind of partnership that’s greater than the sum of its parts, and has long-lasting benefits for everyone involved.