Do you really need a tax attorney or CPA to fix your tax issue, or are there other professionals out there qualified to handle it? This is a fair question, and the reality is you don’t have to hire a tax attorney or CPA to assist you with your personal or business tax debt or back tax filing issues. You may find there is another type of professional that can provide a quality resolution that may be more economical. Because this may be your first time looking for help with these types of issues, you may not even know what an IRS Enrolled Agent (EA) is. If you are facing a criminal tax issue, attending tax court, or challenging the constitutionality of a tax, you should hire a tax attorney. If you are dealing with highly complicated business or personal tax preparation needs, a CPA may be the way to go. If you are just dealing with back tax issues like missing personal or corporate tax returns or back tax debts owed to the IRS or state, an IRS Enrolled agent or company that employs many of them may be exactly what you need.
Read on to learn more about what tax lawyers do, how they differ from CPAs and how to decide if you should hire one to work on your behalf.
What Is A Tax Attorney?
A tax attorney is a licensed legal professional that holds a law degree and is a subject-matter expert in tax law. If the state or IRS taxing authorities are charging you with tax evasion or other crimes, a tax attorney would likely be the preferred choice to help you defend yourself in court. If you feel you are being unfairly taxed according to the state or U.S. Constitution, you would also hire a tax attorney to represent you in this matter before the tax court.
Tax attorneys also work with small and mid-sized businesses, along with corporations, to ensure that they’re complying with state and federal tax law. Other duties could include:
- Preparing and filing appropriate tax forms for complicated corporate returns
- Like kind exchanges, loss carry-forwards, alternative minimum tax
- Creating legal documents for the client to use in everyday business operations.
- Creation of legal entities like LLCs and Incorporations
- Estate planning
- Criminal Investigations
- Tax Court
What Is A CPA?
A Certified Public Accountant (CPA) is a licensed account professional that graduated with a bachelor’s or master’s degree in a business-related field and completed at least 150 hours of education. They specialize in various accounting-related matters, including tax preparation, and can assist clients in challenging situations with tax planning. CPAs do not go to law school and cannot give you legal advice.
What Is an IRS Enrolled Agent?
IRS enrolled agents are licensed by the U.S. Department of the Treasury and IRS. They have met the requirements to become an enrolled agent by demonstrating significant tax knowledge either by passing a comprehensive examination or by virtue of specific experience gained as an IRS employee. Enrolled agents are granted unrestricted rights to represent taxpayers before the IRS, demonstrate special competence in tax matters, adhere to ethical standards, and are required to stay current with tax law and regulations by completing a minimum amount of continuing education annually.
What Does an IRS Enrolled Agent Do?
EAs wear many hats. Below is an overview of ways in which they assist individuals and businesses with tax related issues:
Help Negotiating with the IRS or State
EAs are well versed in negotiating within the collections and appeals divisions of the state and federal governments. If the IRS or state is trying to collect large sums of money from you, EAs can present a number of options to you that can result in fixing the issue, and possibly even saving you money. Resolution strategies such as offers in compromise, installment agreements, currently not collectable, lien releases and penalty abatements can be achieved with an accomplished enrolled agent.
Help Filing Missing Returns
EAs are licensed to prepare income tax returns. If you have one year to file, or haven’t filed returns in a couple of decades, EAs that file tax returns for a living can help get you all caught up.
Help During An IRS Audit
You can hire an Enrolled Agent to provide professional guidance if you’re being audited by the IRS. Assuming they are well-versed in IRS audits, your EA will advise you on preparing and getting the process over with as quickly as possible, and with the most accurate results possible.
Respond To IRS Notices
Did you recently receive an IRS notice in the mail and have no idea what it means or what to do next? A reputable Enrolled Agent can relay the information to you in a way that’s easy to understand and provide recommendations on how to move forward.
Offer Assistance With Business Tax Issues
Enrolled Agents can help with 941 payroll tax issues, State withholding tax, Sales tax, worker’s comp, unemployment, excise tax and other business-related tax filing and tax debt issues.
When Should You Consider Hiring an Enrolled Agent?
You should consider hiring an EA to assist in these circumstances:
- You owe the IRS and would like to explore relief options, like installment plans or Offers in Compromise or innocent spouse relief.
- You’re behind on many years of tax filings and want to get caught up
- You want to file back tax returns and can’t find all of your old 1099 or W2’s
- You received a bill from your state taxing authority or the IRS and believe the IRS or state filed tax returns on your behalf
- You owe a hefty sum in back taxes and face levies, wage garnishment or tax liens.
What To Look For In an Enrolled Agent
Not all tax EAs are the same. In fact, some that are inexperienced could bring more harm than good. Here’s what to look for when evaluating your options:
- Is the EA you’re looking at an employee of a bigger and more accomplished firm with a proven track record? Typically a larger firm will have a vetting process where they’re only hiring and promoting EAs that have proven their ability to achieve great results for their clients.
- Does the EA have an active enrollment and license and a valid preparer tax identification number (PTIN)? It’s required by the IRS, and you should look elsewhere if they don’t have this number. You can always check with the IRS to see if they’re active by looking here: https://www.irs.gov/tax-professionals/verify-the-status-of-an-enrolled-agent
- References and accreditation. You might look to see if they belong to the National Association of Enrolled Agents, the Better Business Bureau and if the firm the EA works for is rated by Consumer Affairs or the Better Business Bureau.
- Some EAs have law degrees as well which can be helpful in certain cases
How Much Should they Cost?
It depends on the level of service the tax attorney is providing and their experience in the field. The average industry rate is between $150 and $350 per hour, depending on their experience and what type of work they are doing. Most charge flat rates for tax filing work. Some EAs will give you a per-job cost estimate ahead of time based on their experience with other clients.
How To Find And Hire a Qualified Enrolled Agent
Don’t wait until tax issues are out of control before getting a qualified professional on your side. Be proactive and start looking for help sooner than later. And if you’re already saddled down by threats from your state taxing authority or the IRS, there’s still hope.
