The main distinctions among a CPA, an accountant and an attorney are the educational background and the level of privilege. Accountants do not require a specific educational track, as opposed to a CPA or an attorney. They may specialize in a certain field, such as bookkeeping or auditing, or study a broad range of accounting practices in order to help their clients in various financial matters. Accountants who maintain financial records for a company may not perform the internal audit due to conflict of interest. They do not need to be certified by the state in which they practice.
CPAs, or certified public accountants, are public accountants who must pass a professional exam to become certified. They must meet continuing professional education (CPE) requirements annually in order to remain licensed. Because of the evolving nature of tax laws, they must also complete 120 of continuing education courses every three years. This gives their clients assurance that the CPA’s knowledge is up to date and advantageous to their filing purposes. CPAs can become enrolled agents and are allowed to sign federal and state tax returns.
Tax attorneys specialize in researching tax law and understanding taxation. Compared to a CPA or accountant, attorneys have the highest privilege. Due to attorney-client privilege, it is their obligation to protect client information. Any information provided to a tax attorney is kept in strict confidence and a court cannot legally ask an attorney to give information that would in any way harm their clients. Attorney’s can’t be forced to testify whereas other professionals must testify if asked. The benefit of hiring an attorney to assist with taxes comes especially if a client is audited. The attorney would have an accurate understanding of the client’s financial matters, and therefore be able to successfully represent the client before the IRS or other agency.
Attorney’s are trained to logically argue to benefit their clients position before the IRS or
Franchise Tax Board. Enrolled agents are federally-sanctioned tax experts who are registered to represent taxpayers before the IRS. A tax professional can become an enrolled agent either by completing a comprehensive tax code examination administered by the IRS, or having worked for the IRS a minimum of five years in a position that interpreted tax code regularly. Every three years, an enrolled agent must successfully complete 72 hours of continuing education to keep apprised of the changing tax laws. An enrolled agent who is not an attorney has limited privilege.
The privilege encompasses federal audits and collections, but does not cover the preparation and filing of taxes, nor any tax matters at the state level, unless specifically noted by the state.
At EBS Consulting, Carey Lampel is our lead attorney, we have CPA’s and enrolled agents on our staff.