Your Accountant Handles Your Taxes. Can They Handle Your IRS Problem?
Your accountant may absolutely be able to represent you before the IRS. But the tax attorney vs CPA decision becomes important when your problem involves legal defenses, personal liability, or a dispute over your rights.
The question isn’t who’s better. It’s who has the right experience to protect you and your business.
The IRS letter is sitting on your desk. You forward it to the accountant who’s done your returns for years.
A few minutes later, your tax preparer says: “I can take a look.”
Because that accountant works with taxes, you feel confident that she can handle the IRS letter, right?
Because there’s a quieter question underneath it.
Is handling IRS notices still within your accountant’s skills and knowledge?
Income tax return preparation is not the same as representation.
Your tax accountant understands the correct places to show your income and expenses on your tax return. But aggressively representing you in any IRS or state matter is something completely different. These are related tasks, but require vastly different background, training, and experiences.
Here’s the thing. The tax attorney vs. CPA question was never about who’s “better.” It’s about what your problem actually needs: accounting expertise, legal strategy, or both.
And knowing the difference in skills required can save you from incorrectly relying on the wrong professional for the actual problem mentioned in that IRS letter.
Can My Accountant Represent Me Before the IRS?
Yes. Certified Public Accountants (CPAs), Enrolled Agents (EAs), and attorneys all have representation rights before the IRS.
However, while that CPA or Enrolled Agent who prepares your tax return is a tax professional, he may not necessarily have the knowledge in the field of IRS Exam Procedure, or IRS Collection Procedure.
When properly authorized, including through IRS Form 2848 where applicable, these professionals can:
- Represent you during an IRS audit.
- Respond to IRS notices and inquiries.
- Negotiate installment agreements or Offers in Compromise.
- Handle collection matters and administrative appeals.
The real question isn’t whether your accountant is allowed to handle your problem. It’s whether they have the specialized experience your situation requires. You must be careful to select the correct, reliable professional for the problem.
A trustworthy attorney should be able to explain why their involvement would benefit your particular case.
Suggestion: When asking for representation, ask the professional his (or her) experience with the problem. And ask them to specifically describe the details of the outcome.
The distinction becomes more important when your problem involves using multiple strategies for sometimes layers of tax problems, your legal rights, potential defenses (especially when cash, unpaid payroll taxes or unpaid sales taxes are involved).
That can happen in numerous situations.
1. Confidentiality: What Stays Between You and Your Advisor?
Under Internal Revenue Code Section 7525, certain confidential tax advice communications with federally authorized tax practitioners, including CPAs and EAs, may receive protection similar to attorney-client privilege. This is especially applicable when you have certain details that you do not wish to share with the IRS.
Let’s say you’re concerned about something in a previous tax return.
Maybe income wasn’t reported correctly. Maybe a business transaction was treated in a way the IRS is now questioning. You could have other sensitive details you wish to remain private.
Attorney-client privilege can provide broader protection for qualifying confidential communications made for legal advice, including in criminal matters.
But wait. Neither privilege protects every conversation or document automatically.
Existing financial records, for example, don’t become privileged simply because you give them to an attorney.
If you’re concerned about possible fraud allegations, unreported income, etc. even potentially criminal exposure, understanding these distinctions before discussing sensitive details can be especially important.
2. Payroll Taxes: When Business Debt Can Become Personal?
Under the Trust Fund Recovery Penalty, the IRS may seek to collect certain unpaid trust fund taxes personally from individuals who meet the legal requirements for responsibility and willfulness. Collection is not restricted to the business, but may also include from you personally.
The Internal Revenue Code Section 6672 provides the elements to determine someone to be personally responsible for IRS tax. Many states have a similar statute.
When Does the Trust Fund Recovery Penalty (IRS) or Personal Responsibility Tax (State) Apply?
The penalty applies when the IRS or state determines that someone meets the requirements of willful failure.
For example, the IRS must establish the applicable legal requirements under 26 U.S.C 6672. These include having a known duty to withhold and pay the tax over to the IRS, failing in that duty, and having chosen to use the withheld funds for another purpose.
That means examining questions such as:
- Who had authority over company payments?
- Who knew the taxes weren’t being paid?
- Who decided which creditors received money?
Your accountant may help reconstruct the financial records and establish what happened. A tax attorney can evaluate how those facts relate to personal liability, potential defenses, and the legal response.
Because at that point, the question isn’t only how much the business owes. It’s whether you can legally be held responsible for paying it.
3. IRS Collections: What Can the IRS Actually Take?
The IRS has limitations as to what property it may seize, or “levy”. Payments to the IRS are not simply limited to what you or your business can afford. Collection enforcement must also consider what the IRS is legally permitted to collect, what procedures apply, and whether you have rights to challenge the action and protect your money and property.
When the collection officer has not followed the required procedures, or you have grounds to challenge a proposed collection action, an attorney will use any number of legal approaches to protect the taxpayer’s rights and property.
See related article: What the IRS Cannot Take!
4. Court: Will the Dispute Require Representation in Court?
Some tax disputes cannot be resolved with a Revenue Agent or Revenue Officer. To pursue the desired outcome, the matter possibly may move into the U.S. Tax Court, federal district court, or another legal venue, so the matter can be heard by a judge.
Note that representation rules change depending on where the case goes. The U.S. Tax Court has its own admission requirements. Attorneys who meet its requirements may be admitted through a simple application process, while CPAs and ESs must qualify through a separate examination and admission process.
Being authorized to represent you before the IRS isn’t the same as being authorized to represent you in court.
Why Can’t My Accountant Defend the Returns They Prepared?
Your accountant is allowed to represent you during an IRS audit. But when the audit challenges the tax returns the accountant prepared, their own work becomes part of the examination. That can create a conflict between defending their work and protecting your interests. An independent tax attorney can defend the tax return, challenge the auditor’s conclusions, and develop a legal defense while your accountant provides the financial records and accounting support.
Think about what happens when an auditor questions missing cash sales, unsupported deductions, or the way your business reported income. The questions may quickly move beyond whether the numbers add up:
- What information did you give your accountant?
- What records did the accountant review?
- Who decided how to report the transaction?
- Did anyone know the information was incomplete or incorrect?
Suppose the IRS challenges the treatment of transactions in returns your accountant prepared. Now there may be questions about what information they received, what advice they provided, and how certain decisions were made. Now your accountant may have to explain their own actions while also speaking for you. Even a careful, honest accountant can end up in an uncomfortable position.
This is not to criticize accountants. Good tax accountants recognize when their clients need an independent tax defense attorney. Referring an audit representation to an attorney can help the accountant and client the relationship they have spent years building.
Effective IRS audit defense or state sales tax audit representation requires more than sending the auditor bank statements. It may involve challenging assumptions, defending documentation, applying tax law, and deciding how to respond to sensitive questions (for example: underreported cash sales).
Your accountant can remain an important part of that process. The goal is to bring the right experience to keep your defense focused on protecting you and your business.
And that’s when an independent legal perspective may be valuable.
That doesn’t automatically mean your accountant has a conflict of interest or must stop representing you. But in some circumstances, their role in preparing the returns could raise questions about independence, professional responsibilities, or whether they might become a witness.
If your IRS dispute has reached that stage, a Strategy Session with Tax Law Offices can help you evaluate whether legal representation makes sense.
How Do You Know if You Can Trust a Tax Attorney?
Look for a tax attorney who has handled problems like yours, explains the risks clearly, and makes time to answer your questions. Ask about their experience with IRS audits, tax debt, or criminal tax defense (whichever applies to your situation). A trustworthy attorney should explain the proposed approach and what they need from you. Be careful with promises of a large tax reduction before anyone has reviewed your financial situation.
When your business, income, or family’s financial security is at stake, you need to understand who you are hiring. Here are three questions worth asking:
- Have you handled tax cases like mine?
An IRS payment agreement, a sales tax audit, and a criminal tax investigation require different experience. Ask the attorney to explain their work with the kind of problem you face. For a business owner with a large tax liability, experience handling complex business tax matters is especially important.
- Can you explain how you would approach my case?
Your attorney should understand the deadlines, available defenses, and steps the government must follow. Knowing tax law is essential. Understanding IRS procedure matters, too. You should leave the conversation with a clearer understanding of your problem and the next step.
Be cautious if someone jumps straight to an Offer in Compromise without understanding your assets, income, and filing history. An IRS settlement depends on your circumstances. There is no standard percentage everyone gets to pay. The resolution process is not one-size-fits all.
- Will I be able to communicate with you?
Ask how the firm will keep you informed and who you should contact when questions come up. You should have a clear communication plan from the beginning. You should know who to call, when to expect a response, and when you and the lawyer will next discuss your case.
You need access to the attorney responsible for your representation. Ask how questions are handled and how you will receive updates. You should understand what is happening, what decisions need to be made, and what information you must provide.
For example, at Tax Law Offices, Inc. every case has a dedicated communication partner. This firm’s policy is to return calls and emails within 2-4 business hours. All cases begin with an introductory call so the client can meet the assigned team and establish a communication schedule. This firm also schedules a 28-day status meeting to review that case, answer questions, and discuss the next steps.
Does It Have to Be One or the Other?
No. An accountant and tax attorney can work together, each bringing experience that helps protect a business and its owner. The accountant understands the financial records and how the company operates. A tax attorney evaluates legal exposure, develops defenses, and handles disputed legal issues. Hiring a tax attorney does not mean ending a trusted accounting relationship. Often, it gives the accountant additional support when a tax problem becomes more complicated.
Business owners often have longstanding relationships with their accountants. Those professionals may have helped build the business, manage difficult years, and keep financial reporting on track. An IRS audit or payroll tax dispute should not automatically undo that relationship.
Instead, the tax attorney can build on the accountant’s knowledge.
For example, in a payroll tax dispute:
- The accountant can help organize the facts: payroll records, tax deposits, payment history, and records showing who controlled business finances.
- The tax attorney can evaluate legal responsibility: whether those facts support personal liability, what defenses may apply, and how to respond to IRS questions.
- Together, they can support a successful defense: the accountant supplies financial detail while the attorney develops the legal position.
Confidentiality also deserves attention. In some circumstances, an attorney may engage an accountant to help provide legal advice. Certain communications may receive privilege protection, depending on the purpose and circumstances. Simply copying an attorney on an email does not make it privileged.
The goal is to protect the business while preserving a valuable professional relationship. The accountant can continue providing accounting services, with experienced legal support when the situation calls for it.
Schedule Your Strategy Session
This article provides general information about federal tax matters and does not constitute legal advice. Available rights, representation options, and resolution strategies depend on the facts of each case.
Schedule Your Strategy Session
This article provides general information about federal tax matters and does not constitute legal advice. Available rights, representation options, and resolution strategies depend on the facts of each case.
Schedule a 30-minute strategy session with Tax Law Offices.
IRS Tax Attorney | Naperville, IL
Frequently Asked Questions
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Can My Accountant Represent Me Before the IRS?
Yes. Certified Public Accountants (CPAs), Enrolled Agents (EAs), and attorneys can represent taxpayers before the IRS when properly authorized. That includes audits, collection matters, installment agreements, Offers in Compromise, and administrative appeals. However, preparing tax returns and handling IRS disputes require different experience. Before choosing a representative, ask about their experience with the specific problem and the outcomes of similar cases.
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Tax Attorney vs CPA: What’s the Difference in an IRS Dispute?
A tax attorney brings legal analysis to questions involving personal liability, procedural rights, defenses, and litigation. That perspective becomes especially important when a dispute involves sensitive facts, potentially criminal conduct, or several connected tax problems. The choice depends on the experience and legal skills the situation requires. Some cases benefit from both accounting support and legal representation.
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Are Conversations With an Accountant Protected Like Conversations With a Tax Attorney?
Certain confidential tax advice communications with federally authorized tax practitioners may receive protection under Internal Revenue Code Section 7525. Attorney-client privilege can provide broader protection for qualifying confidential communications seeking legal advice, including in criminal matters. Neither protection covers every conversation or document. Existing financial records do not become privileged simply because they are given to an attorney.
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When Can Unpaid Business Payroll Taxes Become a Personal Liability?
Under the Trust Fund Recovery Penalty, the IRS may hold an individual personally liable for unpaid trust fund taxes when the legal requirements for responsibility and willfulness are met. Relevant questions include who controlled payments, who knew the taxes were unpaid, and who decided to pay other creditors. An accountant can help establish the financial facts, while a tax attorney evaluates personal liability and potential defenses. State personal liability rules depend on the applicable state law.
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Can the IRS Take Any Property to Collect a Tax Debt?
No. IRS collection authority has legal limits, and collection actions must follow applicable procedures. Evaluating a levy involves examining the property involved, the required procedures, and any available rights to challenge the action. A tax attorney can assess whether the IRS followed those requirements and identify grounds for protecting the taxpayer’s rights and property.
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Can My Accountant Represent Me in Tax Court?
IRS representation rights do not automatically authorize someone to represent a taxpayer in court. The U.S. Tax Court has separate admission requirements. A CPA or Enrolled Agent must qualify through its examination and admission process to practice there. Representation requirements also differ in other courts, so the representative’s authorization must match the court hearing the dispute.
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Why Might an Accountant Avoid Defending Returns They Prepared?
When an audit challenges a return, the preparer’s own decisions, records, and advice may become part of the examination. That can raise concerns about independence, a potential conflict of interest, or whether the accountant could become a witness. Preparing the return does not automatically disqualify the accountant. An independent tax attorney can develop the legal defense while the accountant provides financial records and accounting support.
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How Do You Know if You Can Trust a Tax Attorney?
Look for relevant experience, clear explanations, and a practical communication plan. Ask whether the attorney has handled similar tax problems, how they would approach the matter, and how questions and updates will be managed. Be cautious about promises of a large tax reduction before the attorney understands the taxpayer’s finances and filing history. IRS settlements depend on individual circumstances, rather than a standard percentage.
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How Does Tax Law Offices Keep Clients Informed?
Every case has a dedicated communication partner. Cases begin with an introductory call to meet the assigned team and establish a communication schedule. The firm also schedules a 28-day status meeting to review the case, answer questions, and discuss next steps. Tax Law Offices, Inc’s policy is to return calls and emails within 2–4 business hours.
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Can an Accountant and Tax Attorney Work Together?
Yes. An accountant can organize financial records, explain accounting methods, and help establish what happened. A tax attorney can evaluate those facts under the law, develop defenses, and handle disputed legal issues. This cooperation can preserve the accountant-client relationship while adding legal support. In certain circumstances, an attorney may engage an accountant to assist with legal advice, but privilege protection depends on the purpose and circumstances of the engagement.