Remember the ladder concept:
It's like the ladder principle. A lot of people are clustered at the bottom rung of the ladder, a lot of people are somewhere in the middle, and some are at the top of the ladder.
Seasonal tax prep outfits are at the bottom
At the bottom of the ladder are the seasonal tax preparation firms. Among these are H&R Block and Jackson-Hewitt. The do-it-yourself software programs, like TurboTax, also fall at this first rung of the ladder.
Enrolled Agents -- second rung of the ladder
Next up the ladder are Enrolled Agents. According to the IRS, "An enrolled agent is a person who has earned the privilege of practicing, that is, representing taxpayers, before the Internal Revenue Service. Enrolled agents, like attorneys and certified public accountants (CPAs), are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can practice before."
The basic problem with Enrolled Agents is that they are not required to have any specialized training or education beyond the IRS study program and that is very basic. You may be represented by someone with little more than a high-school diploma and no collegiate training at all. Hiring an Enrolled Agent can be a gamble. If you're not savvy enough to critique an Enrolled Agent's abilities, you better keep climbing the ladder.
Certified Public Accountants -- another step up the ladder
Continuing up the ladder we encounter the first truly professional level, that of the Certified Public Accountant (CPA) which is the statutory title of qualified accountants in the United States who have passed the Uniform Certified Public Accountant Examination and have met additional state education and experience requirements for certification as a CPA. In California a Bachelors degree from an accredited college or university is required.
Attorneys at Law -- at the top of the ladder
On the top of the ladder you will find attorneys at law who are tax specialists. Many tax law firms employ CPA's and oftentimes Enrolled Agents, but they work under the supervision of a licensed attorney at law. Attorneys at law are true professionals who usually have a four-year university education behind them plus another four years of law school on top of that. Working as a lawyer involves the practical application of abstract legal theories and knowledge to solve specific individualized problems and to advance the interests of their clients.
The practice of law is substantially more intricate and demanding than any other the lower rungs of the ladder. Law students generally serve an internship in a court, district attorney's office or law firm. This kind of on-the-job work/study is generally referred to as Law Office Study and the student workers are most often known as law clerks.
Attorneys generally earn a doctorate degree in law, the degree of Juris Doctor (J.D.), in addition to the a bachelor's degree before they are ready to begin their professional careers.
It takes all these years of combined education and field training before someone is officially deemed to be qualified to take the state bar exam and begin a career as an attorney at law.
Don't get burned or under-served:
If you have tax problems or other serious financial challenges, do yourself a favor and make sure you get the highest quality advice and help available -- and that will come to you only from an attorney at law. Don't be fooled by non-attorney businesses that try to help for a fee or that push some sort of "program".
The cost is usually about the same to hire an attorney as it is to hire someone with lesser credentials. The fees charged by most tax attorneys are generally affordable to most people. Even if the fees were high, a tax attorney is still the only person out there with the training, skills and moxie to go toe-to-toe with the IRS (or anybody else) on points of law within the Internal Revenue Code or the California Revenue and Taxation Code.
About audits:
This is all particularly true when it comes to audits. Be advised: if you are being audited you need the help of a tax attorney ASAP. Don't take a CPA with you to an audit. CPAs generally speak only to the method and manner in which your tax returns were prepared. CPA's often testify to the origin of the information provided to complete the tax returns, but that's not enough help for an audit. You're going to need a lot more.
Only an attorney at law is qualified to debate points of law and application of the tax codes -- and that's exactly the kind of help you're going to need at an audit. In fact, in many cases, the lawyer will take care of the entire audit on your behalf. You may not even have to show up to most meetings. A skilled and experienced attorney is a very powerful tool for you to have on your side when you are faced with an audit.
Ask for a free legal consultation with an attorney:
Most tax attorneys will grant a free consultation during which time you can meet and talk to an attorney free of any charge. In fact many tax law firms see it to be your right to consult with an attorney anytime you are facing serious tax-related problems.
The attorney will answer your questions, provide the legal advice you need, let you know what your options are so you can make an informed choice, and the attorney will develop and recommend a strategy, or game plan, to get you out of the spot you're in. It should take anywhere from 45-minutes to maybe an hour or a bit more. A good law firm is not going to excessively watch the clock. They will give you the time you need.
Make a few phone calls. If the law firm you talk to will not grant you a free consultation, keep on looking. There are plenty of solid, ethical, honest tax law firms that will happily grant you a free consultation if you have a problem that is within the scope of the firm's practice. These firms are usually the busy ones (for obvious reasons). It may take a bit of effort to get through to someone at a busy law firm, but someone will call you back. A good tax law firm will call you back within 24 to 48 hours.
Choose the right kind of law firm. Here's how:
Be sure you find a law firm that handles a broad range of financial issues in addition to tax law. They should also be able to offer you bankruptcy services and be able to help you with other issues like 2nd mortgage problems, maxed-out credit cards and similar financial issues. Make a few calls until you happen upon a law firm that seems to be a good fit for you. Here's an example of the kind of broad "full service" cases a good tax law firm should handle. Additionally, a good tax law firm a will happily confirm to you that they offer free legal consultations with an attorney at law (not a paralegal or law clerk). Be sure to ask.
The State Bar of California
Created by the state legislature in 1927, the State Bar is a public corporation within the judicial branch of government, serving as an arm of the California Supreme Court. All State Bar members are officers of the court.
Membership in the State Bar of California affords attorneys the right and privilege of practicing law in this state. The bar's integrated network of functions and services — many of them mandated by law — protects the public and assists attorneys in meeting their professional obligations.
Make sure you speak only to an attorney at law who is in good standing with the State Bar. They have a search box on their web site. Enter the attorney's full name ( a middle name can make a huge difference) in the search box provided under "Attorney Search". Any disciplinary actions taken against the attorney will appear.
Finding a tax attorney
The Bar Association of San Francisco offers a lawyer referral service.
In other areas of California please go to your county bar association or use the statewide lawyer referral service provided by the California State Bar.
Resources:
State Bar of California
Bar Association of San Francisco
About the Juris Doctor degree (J.D.)
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