When Do You Call a Tax Attorney Versus an Accountant?

What each can do to get you square with the IRS

By Trevor Kupfer | Last updated on June 28, 2022

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When you’re already behind on filing and/or paying taxes, the thought of reaching out to a paid professional is understandably daunting.

According to Barry L. Guterman, the founding attorney at The Guterman Tax Law Firm in Los Angeles, you generally need a tax attorney when: 

  1. you can’t settle a tax examination and the amount owed is substantial to you
  2. the tax agency notifies you that it will take enforcement action (levy or seizure) to collect what’s owed
  3. your tax preparer recommends you do so
  4. the tax issues could have a material impact on your business or personal finances

“It’s like anything else that breaks or left unattended could cost much more to repair,” he says. “Are you going to fix it, or let it get worse? And do you feel comfortable doing it yourself, or do you think your tax preparer, accountant or your personal attorney can do it? If not, consult with a tax attorney.”

Tax Professionals Can Help … Until They Can’t

Not all conflicts with the IRS require the specialized expertise of a tax attorney. Many you can navigate on your own, even more can be handled by your tax preparer or certified public accountant (CPA), and only the most severe of cases require a tax attorney. “If someone has to prepare and file an amended return, or hasn’t filed a tax return, or hasn’t paid it and needs time, most of those things may not require an attorney,” Guterman says.

When a tax situation seems too difficult or complicated to handle yourself, you can first reach out to an accountant. “A lot of tax attorneys end up getting referrals from CPAs, other attorneys and financial professionals. People often seek out tax attorneys when they or their representatives cannot resolve their tax matter due to difficulties encountered during an audit, there are complicated questions of tax law, governmental collection actions appear improper, or they’re receiving mixed advice and aren’t sure what to do,” says Guterman.

If you’re already working with an accountant and your case isn’t progressing as you believe it should, think of a tax attorney as a second opinion, he adds.

“Sometimes tax problems can’t be compartmentalized or treated as an isolated issue. You need a tax attorney like when you need an architect to build a home—someone to take a step back and look at the broader picture,” Guterman continues. “We look at what’s causing the problems. Are the issues more than strictly compliance? Does it present not only income tax issues, but employment tax, sales tax, federal as well as state? If you can’t pay [back taxes], are you paying on a current basis? Do you need approaches to penalty minimization? You call an attorney  for a broader, more individualized approach.”

Other good times to lawyer up: when you can’t pay back taxes or the IRS rejects something you filed. “Many accountants represent clients in appealing their cases, but you may need a real advocate—particularly when large amounts of penalties are involved. If you’re talking small disputed amounts, it is unlikely to be cost effective to call an attorney,” Guterman says. “If you can’t pay [back taxes], tax attorneys can work out arrangements, with or without tax liens. Those who do tax controversy work are well versed because we’ve dealt with these a lot.”

Often tax attorneys charge hourly, and some charge flat fees based on a specific engagement. Guterman warns that some flat-fee firms “may be effective” when the tax problem is not isolated from a client’s business and personal concerns; that is, when issue goes beyond “I don’t owe that, or I can’t pay that.”

“There’s a lot of good information on the IRS website that you can look up yourself, and that most accountants know how to do. If, for example, you haven’t filed taxes for a year, you can go online and apply to get a payment arrangement over 72 months or something like that. You don’t need a tax attorney, unless there’s something more going on.”

As for the myriad companies that advertise themselves as tax advocates: “Their services aren’t cheap. For what you get charged by one of those firms, I’ve found you can hire a good tax attorney, for the same or less” he says.

The cost is something an attorney should discuss with you in your very first meeting, or initial consultation. “You hire an attorney for an hour to explain the situation, get an initial review of your case, and, perhaps, a general plan to resolving your matter with an approximate cost to implement that plan or approach,” says Guterman.

If you want more information on this area of law, see our tax overview.

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