We are often asked: “What is the difference between a Certified Public Accountant (CPA) and a tax lawyer?”

Let’s say that a tax lawyer can do everything a CPA can do, plus it can independently (without your presence) defend you from IRS during inspection or in court. Besides, a tax lawyer has the right to file claims on all tax issues to courts on your behalf and in your name.

If a company turnover exceeds one million USD per year, we strongly recommend our clients to prepare and file tax returns with IRS only via tax lawyers. A tax lawyer deals with both corporate and personal taxes.

A CPA has the right to defend you from IRS only during an inspection and only in your presence. A CPA does not have the right to defend you in court.

In the USA in order to appeal a decision of the IRS – the main tax authority in the country – regarding accrual of tax arrears a tax payer has the right to file a claim with a Tax Court, a Federal District Court or a Federal Appeal Court. The choice of the court depends on a number of factors, e.g. on the procedures for filing a claim to this or that court, jurisdiction of each of them, cognizance etc.

But as practice shows, 95% of cases regarding appealing IRS decisions in the USA are considered by Tax courts.

If a tax payer wants to appeal IRS decision on accrual of tax arrears, he/she has the right to file the respective claim to a Tax Court within 90 days after receipt of such IRS decision. When filing a claim with a Tax court the execution of IRS decision regarding paying the tax arrears is suspended.
It should be mentioned that a Tax court has special procedures governing its activities and claims consideration. The main peculiarity is that the Tax Court has the right to independently establish judicial procedure for its activities. It means that it controls the procedures of tax disputes resolution except the rules on evidence that are established by the Federal Provision on Evidence.

In principle a tax payer can represent his/her interests in the Tax Court both independently and via a representative. Such representative could be a lawyer or another person registered with the Tax Court. All persons (except lawyers) who intend to represent the tax payer’s interests in the Tax Court, should pass the necessary exams.

Frankly speaking, we are not sure whether you will be able to pass them even if you are an experienced CPA.

The Tax Court can refuse to grant this or that person the right to represent the tax payer’s interests in the court case or suspend the right of such person to perform the representation functions in the Tax court. The Court also has the right to disqualify the representative if the latter does not have sufficient qualification, or his/her personal or professional qualities do not allow him/her to duly exercise his/her functions. In short, the Court can turn down your representative (if he/she is not a lawyer having the corresponding license), even if he/she passed all the necessary exams.

A representative initiating an ungrounded tax dispute can be charged with all the costs related to his/her services. However only in part that such costs exceed reasonable costs of representation services. The amount of costs to be reimbursed by the representative is calculated by multiplying the number of hours he/she spent on the court hearing exceed the reasonable number of hours, by the reasonable hourly rate. At that the limits of reasonableness are established by the Court. So it is still better to use services of a lawyer.

The above rule is also applied in cases when tax payers represent their interests themselves. Usually it happens in cases of minor tax disputes, because such cases are considered following a simplified procedure.

As we already mentioned before, to be considered an appeal should be filed within 90 days from the day of sending to the tax payer a notice on decision regarding accrual of tax arrears. If the IRS decision is addressed to a person who is outside the US, then such appeal can be filed within 150 days. The above 90 and 150 days include weekends and holidays. At that an appeal is considered filed in time if it was filed the next day after Saturday, Sunday or a public holiday. If an appeal was filed with violation of the above terms, the Tax Court should refuse to consider it due to lack of jurisdiction.

Unlike Moscow courts (and courts of other Russian cities) US courts do not have to follow IRS policy. Courts here consider cases based on the letter and spirit of the law, and not from the point of view of the state’s interest. In the USA the state interest lies in obedience to the law and maintaining trust of businesses to the state. No court will consider a case from the point of view reflecting the so-called “position of the state”. That is why if you are right there is a very good chance of winning the case and calling back the ungrounded tax claims. That is, given a good tax lawyer, of course.

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