The Tax Attorney: A CPA’s Secret Weapon

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It’s relatively common to witness clients trying to decide whether they want to hire a Certified Public Accountant (CPA) or a tax attorney. Oftentimes, people are considering the two as if the two professionals are interchangeable.

The truth is, CPAs and tax attorneys serve significantly different roles that set their services apart from one another. There’s one key difference that defines a client’s relationship with each professional partner, and for this reason, both CPAs and tax attorneys should (and often do) feel confident recommending that their client connects with the other.

As a CPA, one of the most valuable tools to 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 ensure that you’re legally protected. The partnership may create a reliable relationship to refer their clients for services outside of legal tax support, resulting in new clients for you. 

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 direct services.

What’s the difference between a CPA and a tax attorney?

A Certified Public Accountant (CPA) has a significant educational background under their belt. They are required to have completed 150 hours or more of undergraduate educational studies before passing the CPA examination. Additionally, they have to commit to 120 hours of continued education every 3 years. As such, they considered some of the highest level experts when it comes to handling tax preparation. 

Their services are not often utilized by an average taxpayer, but instead are usually brought in for more complex cases. CPAs know how to abide by federal laws while still minimizing your tax liability and maximizing benefits. Developing a strong ongoing relationship with a CPA may suit your needs if you are looking to build a long term tax plan and need support sticking to it. 

While a tax attorney is still an excellent resource to taxpayers, they serve a different set of needs than CPAs. While CPAs are technically qualified to represent you before a court in the event of an audit, a tax attorney is likely a better choice in situations where you may be involved with trouble with tax authorities. 

Tax attorneys specialize in the legalities of tax payment and their services are most often called upon in defense cases when taxpayers are faced with audits from IRS, EDD, or other federal tax authorities. While tax attorneys may have slightly varying specialties, one thing most tax attorneys have in common is expertise in tax controversy and dispute resolution. 

Why is a tax attorney a CPAs secret weapon?

Your clients may understand that in their simplest roles, CPAs provide accounting advice while tax attorneys provide legal advice. That being said, 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 communication between a client and an attorney, which can restrict IRS and California State tax agencies from discovering information provided to attorneys in confidence. If a tax attorney takes on an accounting role and signs on as a client’s tax-preparer, they actually waive that privilege.

It is 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 satisfy both roles.

As a CPA, you are likely your client’s first point of contact for tax planning. It’s in both involved parties’ best interests for you to direct them to a capable tax attorney to answer any legal questions they have. Likewise, it is in the tax attorney’s best interest to work with a CPA to ensure that they can protect their client-attorney privilege and that their client is getting all of the advice, planning, and protection available to them.

Building Mutually Beneficial Relationship with Tax Attorneys

Now that we’ve established the key differentiators between the two roles, how can you build a mutually beneficial partnership with a tax attorney? With all the benefits that come with a partnership, you’re probably jumping at the opportunity to find a partner to join to see these benefits take action before you. We’re sharing a few tips to start building the right partnership for your business: 

Network With Like-Minded Tax Attorneys

Reach out to tax attorneys in your area to get to know them better. You may have access to attend and participate in networking events in your area or you can utilize your personal agenda to solicit tax advice for your own needs. Share your thoughts and values to see if you think someone will make a strong partner.

It’s easier to work with people you know, so it’s worth your while to invest time into building a relationship. If you’re willing to put in the effort to find the right partner, you may end up finding a tax attorney whose perspective and working style fits with yours.

Be Transparent

Honesty is one of the most important building blocks when forming a mutually beneficial partnership. No partner wants to be left in the dark, and neither do you. You should ensure that you are as transparent as possible and practice clear communication from the start. Doing so will ensure you both have a clear understanding of the partnership 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

CPAs may have a broader understanding of tax filings specifically, but tax attorneys have a stronger background in legal matters and how to support their clients in the event of an audit of the tax filings their CPA prepared. Be generous with your expertise and share your knowledge with the partners you engage with. It will help them understand your role more clearly, and better identify whether or not to refer a potential client to you.

Explain the characteristics and needs of your ideal client to help them find referrals, and ask them for the same 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’ll likely be 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. Ensure that you secure your clients’ consent to release their information, to ensure that any requests for records and paperwork are processed quickly and smoothly.

Whether you 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.