Tax Attorney vs. Accountant

When April comes around, Dustin Whittenburg, a tax attorney in San Antonio, will often find himself receiving phone calls from people asking him to prepare their taxes. He lets them know they need an accountant, not a tax attorney. “But if I get a call in September,” Whittenburg adds, “and the caller says, ‘We have this issue on a return, can you help us figure that out?’ I would definitely help them with that.”

So when do you need a tax lawyer instead of a certified public accountant? Christi Mondrik, a tax attorney at Mondrik & Associates in Austin, should know. She’s also licensed as a CPA, though she doesn’t practice as one.

“The general reason you’d want an accountant is for accounting record-keeping, tax return preparation and general compliance-related questions,” she says. 

True, she adds, some compliance questions “may be legal in nature and beyond the expertise of a CPA.” These include tax planning, structuring corporate entities, creating trusts and wills, and “other transactions that have some sort of tax effect.”

An attorney is needed when there are lawsuits, of course, but also for collection issues and “more complex or broad audits,” Whittenburg says.

A key difference between a CPA and a lawyer is attorney-client privilege. “If someone prepares a return that gets audited, that person has to provide everything they looked at to prepare that return,” he says. “A tax lawyer does not have to provide all the documents and information. They can have more open conversations with a client about what the situation is, how they arrived there and what a potential resolution might look like.” 

For that reason, the CPA who prepared a tax return should not represent the taxpayer in an examination before the IRS or the state comptroller’s office, Mondrik says. “They may have good information, but it’s better not to be the person communicating with the government, because the preparer is a witness and doesn’t have the same privileges, like attorney-client privilege.” 

The skill set matters. “Accountants are very good at making sure that rules are followed and the papers are prepared a certain way. The attorney is looking at the law and applying it to the facts,” she says. “It’s just different roles for the two parties.”

A common mistake people make is waiting too long to contact an attorney. If a state or federal agency begins an audit, they’ll send out a notice or a questionnaire. “People need to open their mail and read it and respond,” Mondrik says. “A lot of people miss opportunities.” 

She had a client, for example, who missed a court deadline for an issue involving a tax exemption for solar equipment. “They had a relatively simple issue, but I told them, ‘You missed the deadline.’” Mondrik was still able to get their credit approved and secure their refund, but, she says, “the earlier you start the game, the more tools you have in your toolbox.” 

Both attorneys advise being careful when looking for either a CPA or a tax lawyer. The state Bar and American Bar Association list attorneys who are board certified in specialty areas like tax. On the tax preparation side, Whittenburg warns, “I have seen quite a few return preparers having legal problems with the DOJ. 

I would tell anyone looking for a tax preparer, look very closely at whether they believe this person is doing their return legitimately.”

 There’s also now a third option between tax lawyer and accountant: a certified enrolled agent. “They’re mostly retired IRS agents authorized to represent taxpayers for smaller matters that don’t require an attorney,” says Mondrik. “An EA often has personal knowledge about how things work at the IRS to come to a resolution. We often recommend EAs.”