Sometimes it can be hard to know when to hire a tax attorney over a Certified Public Accountant (CPA) when it comes to your personal tax preparation. In some respects, both tax attorneys and CPAs perform many of the same functions, but there are some salient differences between the two. Most importantly, a tax attorney is your personal advocate when it comes to anything tax-related. A CPA may perform calculations, and help with the mechanics of filling in an individual box on your federal tax return, but tax attorneys can provide greater guidance when it comes to the how regarding your taxes.
This doesn't mean you need to choose between either hiring a tax attorney or a CPA. It's not always binary. In fact, most people that have a tax attorney on retainer also have a separate CPA as well. The relationship between the services each provides isn't so much competitive as it is complimentary. However, the question still remains "who needs a tax attorney?" The simple answer is ... anyone.
Chances are, if you file an IRS Form 1040-EZ, you probably wouldn't need a tax attorney. Generally, the people who fill out this particular version of the federal tax return don't have assets that would require the more in-depth tax form(s). These could include real estate holdings, passive rental income, municipal debt instruments, dividend income, non-public, or non-liquid valuable assets (such as jewelry, or artwork), etc.
Tax attorneys can also play a vital role in the execution of an estate plan. While this usually might also entail retaining the services of an estate attorney as well, the tax attorney is there to help with the actual process of filing one's taxes to the IRS and/or relevant state tax authority. Common estate planning solutions such as trusts, wills, and/or conservatorships can be extremely nuanced, and not easy for the common layperson to navigate successfully on their own. Accordingly, tax attorneys can be invaluable resources when it comes to those aforementioned nuances regarding any applicable federal, state, and/or local tax laws.
Beyond estate planning, tax attorneys can also be extremely useful to anyone who owns, or operates, a business. Especially with Type-C and Type-S corporate structures, the process of properly filing and providing all the requisite supporting documentation requested by the tax authorities can be quite complicated. Also, as mentioned before, tax attorneys are there to be your advocate should you be audited. And, unlike a CPA, there is attorney-client privilege with your tax attorney. There is no such thing as CPA-client privilege.
Contact a tax attorney in your area to learn more about how they can help with your specific tax preparation situation.