Overview

When you owe back taxes or receive collection notices, deciding whether to hire a CPA or a tax resolution firm affects outcomes, cost, and timelines. In my practice advising taxpayers for 15+ years, I’ve found the right choice depends on whether you need ongoing tax planning and compliance (CPA) or urgent negotiation and collection relief (tax resolution firm).

Key differences at a glance

  • Core focus: CPAs handle ongoing accounting, tax preparation, and planning. Tax resolution firms focus on resolving existing tax debts and stopping collection actions.
  • Representation: CPAs, enrolled agents (EAs), and tax attorneys have unlimited representation rights before the IRS. Many tax resolution firms employ or subcontract these professionals; confirm who will represent you and whether they’ll sign Form 2848 (Power of Attorney) (see IRS guidance: https://www.irs.gov/forms-pubs/about-form-2848).
  • Approach: CPAs emphasize compliance and future tax strategy; tax resolution firms are negotiation-oriented (installment agreements, Offers in Compromise, penalty abatements, or appeals).

Credentials and consumer protections

  • CPA: State-licensed; verify with your state board of accountancy. CPAs must meet education, exam, and continuing education requirements.
  • Tax resolution firm: Not a single credential—look for firms that employ CPAs, EAs, or tax attorneys and can show clear representation authority. Ask for the license/credential of the person who will deal with the IRS.
  • Beware of firms that use non‑credentialed staff to promise outcomes. Only credentialed representatives can provide unrestricted representation before the IRS (IRS: https://www.irs.gov/tax-professionals).

When to hire a CPA

  • You need year‑to‑year tax planning, bookkeeping fixes, or reliable tax return preparation to prevent future collections.
  • Errors, filing backlog, or amended returns are the primary issue rather than active collection actions.
  • You want a long‑term advisor to improve cash flow, payroll compliance, or small‑business tax strategy.

When to hire a tax resolution firm (or a specialist)

  • You have active collection notices, levies, wage garnishments, or liens and need someone to negotiate with the IRS or state agency.
  • You want a team experienced in Offers in Compromise, penalty abatement requests, installment agreement negotiations, or appeals.
  • You prefer a firm that handles bulk document gathering, creditor negotiation, and frequent follow‑ups on your behalf.

Who else might be needed

  • Tax attorney: Use when legal issues or potential criminal exposure are present, or for complex litigation with the IRS.
  • Enrolled agent: Federally authorized to represent taxpayers before the IRS and often works in both CPA firms and resolution practices.

Practical checklist for choosing a provider

  1. Verify credentials and representation rights. Ask who will sign Form 2848 and confirm their license/EA/attorney status.
  2. Ask about outcomes, not guarantees. No reputable professional can promise an Offer in Compromise or full penalty relief without review.
  3. Get fee structure in writing: hourly vs. flat vs. contingency. Expect tax resolution work to commonly use fixed fees or retainers plus hourly billing for complex matters.
  4. Check references, complaints, and reviews (state board, Better Business Bureau, and online reviews). Also confirm whether the firm has malpractice or errors & omissions insurance.
  5. Request a written engagement letter that states services, fees, timeframe, and cancellation terms.

Documentation to prepare for an initial consultation

  • Copies of IRS or state collection notices and transcripts (you can get IRS transcripts at https://www.irs.gov/individuals/get-transcript).
  • The most recent three years of tax returns and wage statements (W-2s/1099s).
  • Recent bank statements, pay stubs, profit & loss statements (for business owners), and bills showing financial hardship.
  • Any correspondence you’ve sent to the IRS, and prior agreements (installment plans, lien release documents).

Common fee structures and cost considerations

  • CPAs typically charge hourly or a fixed fee per return/service. Ongoing bookkeeping or advisory work is often monthly.
  • Tax resolution firms may charge a retainer, a flat fee per service (e.g., for an Offer in Compromise), or hourly fees; avoid contingency arrangements that promise a percent of savings without transparency.

Red flags to avoid

  • Guarantees of specific results or promises to stop all collection activity immediately.
  • High‑pressure sales tactics or demands for large upfront fees before reviewing your file.
  • Firms that refuse to provide a written engagement letter or exact credentials of their representatives.

How a blended approach can help

Many clients benefit from both: a tax resolution specialist negotiates an immediate collection solution while a CPA handles long‑term tax planning, amended returns, and future compliance. I often coordinate with resolution specialists to close the immediate problem and then implement changes to prevent recurrence.

Useful internal resources

Final steps and professional disclaimer

Start with a consultation that focuses on your immediate threat (levy, lien, or wage garnishment) and who will actually represent you with the IRS. Keep copies of all notices and ask any prospective advisor to explain strategy, timeline, costs, and the specific credential of the representative.

This article is educational and not individualized legal or tax advice. Consult a licensed CPA, enrolled agent, or tax attorney for guidance tailored to your situation. Authoritative resources include the IRS (https://www.irs.gov) and the Consumer Financial Protection Bureau (https://www.consumerfinance.gov).