How to Work with Attorneys on Audits and Collections

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Tax controversies present a great opportunity for accountants to work with attorneys to provide the best representation to clients.

While some accountants and attorneys see themselves as competing with each other for this work, in many cases, their services are complementary as they provide unique benefits to clients. Where attorneys can add value in audit and collection matters. In fact, there are several areas where working with an attorney can benefit both the client and the accounting firm.

  • Access to legal advice and training. In disputed audit cases, a consultation with an attorney can provide valuable insight on whether to protest the audit. If an appeal is filed, attorneys are often in the best position to research and present legal arguments. Often lawyers are also more accustomed to negotiating with other parties and can help obtain a better result for clients.
  • Protection of the attorney-client privilege. One of the benefits of working with an attorney is that information from clients is protected. For instance, where a client’s tax position could be challenged, the attorney’s advice is protected by privilege. Another example is where an accountant discovers a significant omission or misstatement in a tax return. Simply amending the return can put the taxpayer at risk. A tax attorney could investigate the circumstances to ensure there aren’t other problems. The lawyer can hire the accountant to assist in the matter, which would now protect any information the client reveals to the accountant under the attorney-client privilege. Although accountants have a limited privilege in noncriminal matters, when it comes to potential criminal prosecution, conversations with a CPA are not privileged. 
  • Focus on core business. Even if the accountant has experience handling audits, the question is whether it makes business sense to take care of these matters or pass them to a tax attorney who focuses exclusively on tax controversies. Partnering with an attorney allows accountants to focus on tax planning, preparation and consulting services. These areas are best suited to the education, training and experience of accountants. It’s also continuing revenue for accounting firms as opposed to one-off tax controversy work. Having a law firm handle the audit work can also satisfy clients that they have the expertise of both professionals working on their matter.

Tips on Working Together

The best relationships start with finding the right partner.

  • Make sure you are working with an attorney with a lot of experience and regular dealings with IRS and state taxing officials.
  • Ask colleagues about the reputation of any attorney you are considering referring to clients.
  • Look for an attorney willing to answer your questions and be a resource to you.
  • Work with someone you trust to put client’s first.
  • If you send clients to an attorney, ask your clients whether they were happy with the service they received from the attorney.

Final Thoughts

Partnering with an attorney offers many practical benefits to your accounting practice and to your clients. It enables you to focus on your primary business while maintaining a strong relationship with your client and referral sources.

About Karen Tenenbaum

Karen Tenenbaum

Karen Tenenbaum, Esq. is Founder and Managing Partner of Tenenbaum Law, P.C. (www.litaxattorney.com), a tax law firm in Melville, N.Y., which has focused its practice on the resolution of IRS and New York State tax controversies for over 20 years.

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Jun 13th 2018 10:31

Thanks for sharing your knowledge

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