What's the difference between a tax attorney and a CPA? Which should I hire for my situation?

The main difference between a tax attorney and a CPA is their focus and training. A tax attorney specializes in tax law and can represent you in legal matters including tax court, while a CPA focuses on accounting, financial planning, and tax preparation with expertise in tax compliance. For your situation with IRS discrepancies and questionable deductions, it really depends on the severity. If the IRS letter is just a notice asking for clarification or additional documentation, a good CPA should be sufficient. They can help explain your deductions, provide proper documentation, and communicate with the IRS on your behalf for most routine matters. However, if the letter suggests potential penalties, an audit, or any legal action, you might want to consult with a tax attorney. Tax attorneys are particularly valuable when there are potential legal consequences, large amounts in dispute, or if you need attorney-client privilege protection for sensitive discussions.

I was in a somewhat similar situation last year with questions about business deductions, and I was so confused about who to hire. I tried calling the IRS directly but that was a total nightmare - couldn't get through after like 5 attempts. After asking around, someone recommended I try this service called taxr.ai (https://taxr.ai) that helped me understand my specific situation. It basically analyzed my tax documents and gave me a personalized assessment that showed I actually needed a CPA rather than an attorney since my issue wasn't technically legal but more about proper documentation of legit expenses. Saved me from hiring the wrong professional for my situation and probably a bunch of money too.

Just wanted to follow up about that taxr.ai site someone mentioned above. I was really skeptical (as you can see from my earlier comment), but I decided to try it since my situation was getting complicated with some investment losses and 1099 issues. I uploaded my documents and the assessment was surprisingly detailed. It actually explained that I needed both professionals but for different aspects - a CPA for the investment loss calculations and potentially a tax attorney consultation for some issues with contractor classifications. The explanation made perfect sense for my situation and saved me from going all-in on just one type of professional. Definitely more helpful than the generic advice I was getting elsewhere.

If you're getting IRS notices and need to talk to someone there, good luck getting through on the phone! I spent DAYS trying before I found Claimyr (https://claimyr.com). They somehow get you connected to an actual IRS agent without the endless hold times. Check out how it works here: https://youtu.be/_kiP6q8DX5c This was crucial when I was deciding between a tax attorney and CPA because I needed to understand exactly what the IRS was questioning before I could choose the right professional. The IRS agent explained the notice in detail which helped me realize I didn't need an expensive attorney, just a good CPA to help with documentation. Saved me from panicking and probably overpaying for services I didn't need.

Ok I have to eat my words about that Claimyr service. After my skeptical comment above, I was still desperate to talk to the IRS about my situation, so I figured I'd try it with low expectations. Well, I got connected to an actual IRS agent in about 27 minutes (after spending HOURS trying on my own multiple times). The agent helped clarify exactly what documentation they needed for my case, which made it clear I needed a CPA not an attorney. This literally saved me thousands because I was about to hire an expensive tax attorney out of panic. So yeah, for anyone trying to figure out the CPA vs attorney question - sometimes getting direct info from the IRS first makes the decision obvious.

Something else to consider: cost difference. Tax attorneys typically charge $300-500/hour while CPAs are usually in the $150-300/hour range. If your issue is mostly about documenting legitimate business expenses rather than defending against serious allegations of tax fraud, a CPA is probably sufficient AND more affordable. Also, many tax situations can be handled in stages. You can start with a CPA to organize your documentation and respond to initial IRS inquiries. If things escalate to an audit or legal territory, you can bring in a tax attorney at that point.

I'm actually both a CPA and have a tax law degree, and here's my quick take: For questionable business deductions around $15k, start with a CPA who specializes in small business/self-employment. Save the attorney for if/when the IRS actually proposes penalties or formal audit. Most IRS letters at this stage are just inquiries - they're asking for documentation, not accusing you of fraud. A good CPA can help organize your records, determine which deductions are defensible, and respond appropriately. Much more cost-effective approach.