How Much Help Is Your Tax Preparer?

Can your tax preparer help you if you run into trouble with the IRS? It depends on what kind of trouble, but generally your everyday, average tax preparer cannot do everything necessary to resolve your tax issues.

If your tax preparer is either an enrolled agent, certified public accountant, or tax attorney, then you will likely have all the authority you need in your corner to address whatever the problem might be. Although attorneys are often better suited for assisting with collection, litigation, and tax court matters. The IRS sees these three categories of tax professionals as having “unlimited representation rights.”

But if your tax preparer does not possess one of these three credentials, then the amount of help he can provide is very limited. Tax preparers who are not EAs, CPAs, or attorneys (also known as “unenrolled preparers”) may only represent taxpayers on issues having to do with returns that they personally prepared. And even then, if the issues escalate to the level of the IRS Collections Department, IRS Appeals, or beyond, they must turn it over to an EA, CPA, or attorney with tax preparer credentials (or the taxpayer may try to handle it on his own). If the dispute cannot be resolved administratively and makes its way up to US Tax Court, then it should certainly be handled by an experienced tax attorney, but it can also be handled by an EA or CPA who has been admitted to practice before the Tax Court. And, of course, the taxpayer still has the option to go at it alone as a “pro se” litigant in Tax Court.

It is one thing to say that someone has the authority to help you, but it is quite another thing to say that they have the skills, experience, and desire to help you. I have met a number of Enrolled Agents that are qualified to represent their clients in audits and IRS disputes, but who simply do not choose to do that as part of their business.  And those who make the decision to pass on those types of cases, never gain the necessary experience and skills to represent a taxpayer competently in such matters. Unenrolled preparers are even less likely to include IRS representation as part of their repertoire.

Although nobody anticipates getting into trouble with the IRS, and it can’t really be predicted, these are a few things to keep in mind when finding an experienced tax preparer. And according to the IRS, November is a good time to make that decision.

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Tax Accountant vs. Tax Attorney: Choosing a Professional Advisor

How do you determine if your tax problem requires the skill and knowledge of an attorney, or whether the services of an accountant will suffice?

Both a tax accountant and a tax attorney can handle various tax issues with professional competence. However the skill sets and backgrounds of tax accountants and tax attorneys are different. It is important to consider this when choosing a tax professional to represent you before the Internal Revenue Service (IRS).

A “tax” accountant refers to an accountant whose specific focus is on the area of taxation. There are different types of accountants that can label themselves as a tax accountant. Accountants generally have a bachelor’s degree in accounting. Some accountants choose to pursue a master’s degree in either accounting or business administration. More advanced accountants have been certified by their state board of accountancy and are known as Certified Public Accountants (CPAs). This distinction is important because not all tax accountants are CPAs.

Accountants are numbers driven. Day-to-day, most accountants prepare and analyze accounting records, financial statements, and tax documents. Tax accountants primarily focus on preparing and maintaining the records needed to accurately complete a tax return, and then completing the tax return itself. The use of tax accountant usually ensures that your tax return has been prepared accurately and that you accurately claimed any credits and deductions that were available to you in a given tax period. The use of a tax accountant will also usually ensure that your internal accounting practices are valid and that the information contained therein is complete.

A “tax” attorney before and above all else is an attorney. Attorneys have specific negotiation, research, and advocacy training and experience that allow them to achieve maximum results for their clients. Background wise, attorneys generally have an advanced doctorate degree and have passed intensive moral and competency examinations. Attorneys may become “tax” attorneys through practice and/or education.

Tax law is a specialized and technical field of practice, as the body of tax laws and tax issues are extensive enough to require a dedicated law practice. Tax attorneys can assist taxpayers in various types of tax issues ranging from tax preparation and strategy, to representation of a taxpayer in complex civil and criminal tax disputes. Additionally, the privilege for confidential communications between a tax attorney and their client is broader than the communication privilege applicable to non-attorney tax practitioners. The use of a tax attorney will usually ensure that you achieve the best results with your tax problem and that any related legal issues are properly identified.

Now that you know the basic differences between an accountant and a tax attorney, you may be able to better identify which type of tax professional that you need given your specific circumstances. If still unclear, both usually offer free consultations to determine whether you actually need their services.