Did you know that 3-6% of all American tax filers will have a some sort of tax problem in 2012? With so much need for tax assistance, it is hard to know who the best kind of professional is to help you. And what makes matters even more confusing is that there are three types of professionals who can represent you before the IRS. Sing up for our free taxpayers awareness guide to learn your best move.
This guide is going to give you the necessary steps any great IRS lawyer must undertake to get the best result — every time.
So then, what makes a great IRS laywer?
I think the answer is building a great team of tax professionals. After all, the IRS has a team on their side. Shouldn’t you So let’s talk about some of the key players on your IRS lawyer team.
We believe that tax attorneys are best at quarterbacking the toughest tax problems, and handing off particular parts of a problem to an attorney, CPA, ex-IRS employees or Enrolled Agent ass the facts warrant. The other added bonus, is that with this structure, the Attorney-Client privilege stays intact.
Essentially, being an Enrolled Agent requires no particular education or credentials. An Enrolled Agent is someone who simply passed a test that the IRS administers require, and then they are allowed to represent any taxpayer before the IRS, no matter how complicated the case is.
But here’s the thing, the Enrolled Agent Test that the IRS gives is hard! There are three different sections on individuals, businesses and IRS representation. Each section is full of very particular and practical questions. If someone can pass the Enrolled Agent Exam, then that is a great indication that they know which tax forms are what, and are expert tax preparers.
Certified Public Accountants
But an Enrolled Agent Exam does not ask how about where those numbers that went onto a tax return were generated in the first place. For that, a Certified Public Accountant (CPA) is going to be most helpful. A CPA goes to college for Accounting, and then must pass 4 parts of the CPA exam. These parts are (1) auditing (2) economics (3) regulation (1/2 of which is compliance and the other 1/2 is tax) and (4) financial accounting. So you can see that only 1/8 of the CPA exam is related to tax, whereas 100% of the Enrolled Agent Exam is tax.
This is why you may know a CPA who knows very little about the IRS. Many CPA’s have found more lucrative careers in accounting and auditing for regulatory agencies like the Securities and Exchange Commission. If a CPA cannot answer a simple tax question, that does not mean they are unqualified. For many CPAs the closest they ever get to a tax return is their own 1040.
Where CPA’s excel is in creating spreadsheets of a company’s books, auditing records, and generating meaningful reports. So, even though a CPA may not be a tax expert (note: many are), the IRS still allows them to represent taxpayers before the IRS.
There is no special test you have to take to become a tax attorney, besides passing the BAR Exam in any state. You don’t even need to take any tax courses because the IRS allows any licensed attorney to represent a tax payer before them. Many law schools do, however, require every graduate to tax law courses (my alma mater Quinnipiac University School of Law has such a requirement).
Note: there are two general types of tax attorneys, those involved in compliance and planning, and others, like my tax law firm, which specialize in tax resolution.
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Looking for a little lighter fare? Check out the Strangest State Tax Write-Offs.
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