Resolving IRS Tax Controversies: The Additional Advantages of a Tax Attorney Compared to a Tax Preparer CPA or Tax Preparer Enrolled Agent
Many taxpayers first seek professional assistance after receiving an IRS notice, audit letter, or other correspondence from the Internal Revenue Service. One of the first questions they ask is whether they should work with a tax preparer, a Certified Public Accountant (CPA), an Enrolled Agent (EA), or a tax attorney.
The answer depends upon the nature of the tax controversy.
For many routine tax compliance matters, a qualified CPA or Enrolled Agent may provide excellent assistance. However, as an IRS examination becomes more complex and begins to involve disputed legal issues, procedural questions, significant proposed tax adjustments, or potential litigation, representation by a tax attorney may offer important additional advantages.
Understanding these differences can help taxpayers make informed decisions before an IRS dispute becomes more difficult and expensive to resolve.
Who May Represent Taxpayers Before the IRS?
The IRS authorizes several categories of professionals to represent taxpayers in administrative matters.
Tax Attorneys
Tax attorneys are licensed lawyers who concentrate on federal and state tax law. In addition to representing taxpayers before the IRS during examinations and administrative proceedings, tax attorneys may continue representing clients in court when litigation becomes necessary.
Their training includes statutory interpretation, legal research, procedural rules, evidentiary principles, negotiation, and litigation.
Certified Public Accountants (CPAs)
Certified Public Accountants possess extensive knowledge of accounting principles, financial reporting, and taxation. They routinely prepare tax returns, advise clients regarding tax planning, and represent taxpayers during IRS examinations.
Their accounting expertise often plays an essential role in explaining financial records, reconstructing transactions, and analyzing complex tax calculations.
Enrolled Agents (EAs)
Enrolled Agents are federally authorized tax professionals licensed to practice before the Internal Revenue Service. Many have significant experience preparing tax returns and representing taxpayers during IRS examinations and other administrative proceedings.
Enrolled Agents provide valuable assistance in a wide variety of federal tax matters.
Every Professional Plays an Important Role
Each of these professionals serves an important function within the tax system.
The difference is not that one credential is universally “better” than another. Rather, the nature of the controversy often determines which professional qualifications become increasingly important as the matter progresses.
When an Accounting Matter Becomes a Legal Controversy
Many IRS examinations begin with accounting questions.
The IRS may request:
- Additional documentation
- Bank records
- Business records
- Receipts
- Contracts
- Closing statements
- Accounting schedules
At this stage, accounting knowledge is often central to resolving the examination.
However, some disputes evolve beyond accounting.
The disagreement may involve questions such as:
- The proper interpretation of the Internal Revenue Code
- Treasury Regulations
- Judicial decisions interpreting federal tax law
- Procedural requirements imposed upon the IRS
- The burden of proof
- Penalty defenses
- Evidentiary issues
- Statutory deadlines
As these legal issues become more significant, legal analysis frequently becomes just as important as accounting analysis.
Additional Advantages a Tax Attorney May Provide
Legal Analysis
Federal tax law is far more than preparing tax returns.
Resolving many tax controversies requires careful analysis of statutes, Treasury Regulations, IRS administrative guidance, judicial precedent, and procedural rules.
A tax attorney is trained to analyze and apply these legal authorities when developing arguments on behalf of a client.
Strategic Case Development
Every decision made during an IRS examination can affect later stages of the controversy.
Documents produced during an audit, written explanations submitted to the IRS, factual admissions, and legal positions taken early in the process frequently become part of the administrative record.
A tax attorney evaluates not only the immediate response to the IRS but also how today’s decisions may affect tomorrow’s negotiations, appeals, or litigation.
Procedural Strategy
Federal tax controversies are governed by procedural rules as well as substantive tax law.
Understanding deadlines, preserving procedural rights, evaluating available administrative remedies, and determining the appropriate litigation strategy often become critical as a case develops.
These procedural considerations frequently influence the outcome of a dispute.
Representation Beyond the IRS Audit
One of the most significant distinctions involves continuity of representation.
Many taxpayers assume an IRS audit represents the final stage of the process.
In reality, an audit is often only one phase of a broader federal tax controversy.
Depending upon the circumstances, representation may continue through several stages, including:
- IRS correspondence
- Correspondence audits
- Office audits
- Field examinations
- Administrative conferences
- IRS Independent Office of Appeals
- Collection-related proceedings where applicable
- United States Tax Court litigation when appropriate
Developing a consistent strategy across each stage often places the taxpayer in a stronger position than treating every stage as an entirely separate matter.
The United States Tax Court
If an acceptable resolution cannot be reached administratively, some taxpayers may have the right to petition the United States Tax Court after the IRS issues a statutory Notice of Deficiency.
The United States Tax Court is an independent federal court that resolves tax disputes between taxpayers and the Internal Revenue Service.
One important feature of Tax Court litigation is that eligible taxpayers generally may challenge the proposed deficiency before paying the disputed tax, provided the petition is filed within the applicable statutory deadline.
A tax attorney may continue representing the client throughout this judicial process, providing continuity from the initial IRS examination through litigation when necessary, including representation before the United States Tax Court.
Attorney-Client Communications
As a controversy becomes more complex, taxpayers often wish to discuss sensitive legal issues, possible litigation risks, procedural concerns, and settlement strategy.
Obtaining legal advice early in the process allows taxpayers to better understand their rights, available options, and the potential consequences of various strategic decisions before responding to the IRS.
Why Continuity Matters
One challenge that sometimes arises during lengthy tax controversies is the need to transition from one professional to another as the case becomes increasingly complex.
Changing representatives may require:
- Reviewing years of tax returns
- Reconstructing factual history
- Reexamining financial records
- Developing a new legal strategy
- Becoming familiar with prior communications with the IRS
Continuity of representation allows the professional handling the matter to understand the case from the beginning and continue advocating for the taxpayer if the controversy progresses beyond the audit stage.
Situations Where a Tax Attorney May Be Particularly Beneficial
Representation by a tax attorney may be particularly valuable in matters involving:
- Large proposed tax deficiencies
- Multi-year IRS examinations
- Business tax controversies
- Partnership and corporate disputes
- International tax reporting
- Foreign financial account issues
- Significant penalties
- Payroll tax disputes
- Complex legal questions
- IRS Independent Office of Appeals
- United States Tax Court litigation
Every case is different, and the appropriate strategy depends upon the specific facts and applicable law.
Strategic Takeaway
Every IRS tax controversy begins with questions about the correct application of federal tax law. Some disputes remain primarily accounting matters and may be resolved through the administrative examination process. Others develop into more significant legal controversies requiring careful procedural planning, legal analysis, and, in some cases, litigation.
Certified Public Accountants, Enrolled Agents, and tax attorneys each provide valuable professional services. However, when an IRS dispute becomes increasingly complex or progresses beyond the examination stage, representation by a tax attorney may provide important additional advantages, particularly where legal analysis, procedural strategy, administrative appeals, or judicial proceedings become necessary.
As both a Certified Public Accountant (CPA) and Attorney (JD), I represent individuals, business owners, investors, and professionals throughout the federal tax controversy process—from tax return analysis and IRS examinations to representation before the IRS Independent Office of Appeals and, when appropriate, litigation before the United States Tax Court. My objective is to provide continuity of representation, protect my clients’ procedural rights, and develop a comprehensive strategy designed to achieve the strongest possible outcome.
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