When Do You Call a Tax Attorney Versus an Accountant?

Use these links to jump to different sections:

• Four Common Reasons You Need a Tax Lawyer
• When to Hire a Tax Lawyer vs. a CPA
• A Lawyer Can Handle Your Tax Needs Holistically
• Having Legal Counsel in Disputes with Tax Authorities
• How Much Will Tax Lawyers Cost?
• Find Experienced Legal Help

When you’re already behind on paying or filing taxes, the thought of reaching out to a paid tax professional is understandably daunting. An additional worry is what kind of tax professional you need. If you already have an accountant, do you need a tax lawyer?

While an accountant generally handles financial planning and bookkeeping, a tax lawyer can provide legal advice about your financial decisions and tax liabilities. So, if a tax dispute with the Internal Revenue Service (IRS) takes a turn for the worse, you might need legal counsel.

Four Common Reasons You Need a Tax Lawyer

According to Barry L. Guterman, the founding attorney at The Guterman Tax Law Firm in Los Angeles, California, 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? Do you feel comfortable doing it yourself, or do you think your tax preparer, accountant, or personal attorney can do it? If not, consult with a tax attorney.”

When to Hire a Tax Lawyer vs. a CPA

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). 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 IRS audit, when there are complicated questions of tax law, when governmental collection actions appear improper, or when 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.

A Lawyer Can Handle Your Tax Needs Holistically

“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 also 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.”

Having Legal Counsel in Disputes with Tax Authorities

Other good times to lawyer up are when you can’t pay back taxes or the IRS rejects something you filed. Having a tax lawyer also comes with attorney-client privilege.

“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 [tax debts], 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.”

How Much Will Tax Lawyers Cost?

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

What about do-it-yourself options? “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 apply online 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 experts: “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.

Find Experienced Legal Help

Visit the Super Lawyers directory to find an experienced tax lawyer in your area for tax advice. If you want more information on this area of law, including tax audits and tax penalties, see our tax law overview and related content.