What's the difference between hiring a tax lawyer vs a CPA for tax issues?

So if I'm being audited by the IRS, who should I hire? I just got a letter saying they want to review my deductions from 2 years ago and I'm freaking out.

For an audit, it depends on the complexity and what's at stake. If it's a straightforward examination of deductions and you have good documentation, a CPA might be sufficient - especially if they prepared the return being audited, as they're already familiar with your situation. If the audit is more complex, involves potentially significant additional taxes, or if you're concerned about potential penalties or criminal issues, then a tax attorney would be better. Tax attorneys have attorney-client privilege, which offers more protection for your communications than what you'd have with a CPA.

Does it really work for complicated situations? I have income from three different states plus foreign investments and I can't figure out who to hire.

I'm kinda skeptical about online tools for serious tax decisions. How does it actually determine which professional you need? Seems like you'd need someone to actually look at your specific documents.

It absolutely works for multi-state situations - that was actually part of my issue too with the rental property being in a different state. It asks specific questions about your tax situation including state-specific issues and identifies where jurisdictional complications might require legal expertise. You upload your documents directly to the platform and their system analyzes them to identify specific complexities that would benefit from different types of expertise. It's not just a generic questionnaire - it actually reviews your specific tax documents and highlights where a CPA's accounting expertise or a tax attorney's legal knowledge would be most valuable based on your actual situation.

How does this actually work? Does it just keep redialing for you or something? The IRS phone system is absolutely maddening.

Yeah right... nothing can get through to the IRS these days. I've tried calling over 30 times in the past month. If this actually worked, every tax pro in America would be using it. Sounds like snake oil to me.

It uses a system that navigates the IRS phone tree and secures your place in line automatically. Then when an agent is about to be available, it calls you and connects you directly to that agent. No more sitting on hold for hours - you just get a call when an actual human is ready to talk. No snake oil here - it actually is used by many tax professionals now! But they don't always tell their clients about it because some charge for "IRS representation time" which includes all that hold time. I found out about it because my tax attorney was honest and wanted to save me money on billable hours. It works with other government agencies too, not just the IRS.

Is it ever worth paying for both at the same time? Like could they work together on a complicated situation?

Absolutely! In complex situations, having both professionals work together can be extremely beneficial. For example, if you're creating a complex estate plan or setting up a business with significant tax implications, your CPA can provide the financial projections and tax calculations while your tax attorney ensures the legal structures are optimal. Many high-net-worth individuals and businesses have both a CPA and tax attorney on their professional team. They typically use the CPA for ongoing tax work and consult the attorney for specific legal tax matters. The cost is justified when the potential tax savings or risk mitigation significantly outweighs the professional fees.

This is so important! I learned this the hard way when my CPA had to provide information to the IRS during my audit. Nothing illegal, but certainly embarrassing and led to more scrutiny.