Tax Attorney Job Description, Courses & Certification Requirements
Tax attorneys are specialists in federal, state, and municipal rules and policies pertaining to tax liability and the process of taxation as it relates to estate transfers, material and intellectual property acquisitions, income from all sources, and business transactions of all kinds. Most tax attorneys are retained in a consultative capacity, although many are involved in litigation, representing clients if ever a dispute arises that cannot be resolved outside of the courtroom. Tax attorneys most often work for law firms that offer tax services, and are hired on retainer to represent clients, which may include business and corporate entities, non-profits and other non-governmental organizations, as well as individuals.
Tax attorneys are highly sought after for their expert understanding of the intricacies of tax law and are often called upon to help clients better understand the laws that govern taxation and what’s required of them to remain in compliance. They are also retained to manage personal wealth issues with regard to the tax obligation associated with the transfer of inheritance or an estate. They act as advisors for clients interested in setting up or amending trusts and wills, and also oversee the eventual distribution of financial and material assets among beneficiaries. They may also appear at audit hearings to negotiate on behalf of their clients for the reduction or elimination of tax obligations and related fines, and for the nullification of liens.
Although a number of entities are responsible for creating and enforcing tax law, including municipal and state governments, many tax attorneys specialize in Internal Revenue Service (IRS)-related issues. In this capacity, they may represent clients during an IRS audit, organize and oversee the structuring of IRS settlements, and work alongside other tax professionals like CPAs to organize and prepare tax documents. Tax attorneys will also represent clients in IRS hearings and administrative appeals and in U.S. Tax Court, as well as in the Court of Appeals and even the U.S. Supreme Court if necessary.
The Relationship between Tax Attorneys and CPAs
For many clients dealing with tax issues – particularly with the IRS – the assistance of both a certified public accountant and a tax attorney may be preferred. It is therefore not uncommon to find law firms that employ both tax attorneys and CPAs. Like CPAs, tax attorneys must be well versed in tax law, accounting, and finance; however, CPAs have a unique level of expertise in auditing, accounting, and the preparation of tax documents. While CPAs often work with clients in matters pertaining to finance and taxation, tax attorneys are professionally licensed to provide legal advice, to practice law, and to represent clients during litigation.
Although CPAs and other tax professionals who are not licensed to practice law can register with the IRS as Enrolled Agents (EAs) so as to represent clients in Tax Court, the Statement of Principles, released by the National Conference of Lawyers and CPAs, states that CPAs should always advise their clients to consult an attorney should they receive a notice of deficiency. This is because, many times, the matter may be heard in the district court of the Claims Court rather than in Tax Court. If a CPA learns that a client is under investigation for criminal violations regarding tax laws, the CPA must advise the client to consult an attorney so the client can be advised of his or her legal and constitutional rights.
Attorney-client privilege assures clients that anything they disclose to their tax attorney is deemed confidential, while communication with a CPA is not protected by the same legal concept, and is not inherently confidential.
Educational Requirements for Tax Attorneys
Because of the strong correlation between CPAs and tax attorneys, many professionals pursue concurrent law and accounting degree programs. In fact, some universities work together to offer a number of joint programs for individuals interested in obtaining advanced training in tax law and accounting or business. These hybrid programs allow students to obtain advanced degrees in less time.
The road to becoming a tax attorney starts with an undergraduate degree from an accredited college or university. The undergraduate degree may be in most any discipline, although it is advantageous for an aspiring tax lawyer to major in business, economics, finance, or accounting.
LSAT and Law School Admission
Once a bachelor’s degree is obtained, the student then applies to law school, which is usually a three- year program. In addition to holding an undergraduate degree, the student must take the Law School Admission Test (LSAT) in order to be considered for acceptance in an American Bar Association accredited school. Admission competition is intense, particularly at highly regarded law schools. Students interested in tax law should find a law school with a strong tax law program.
The Law School Data Assembly Service collects college transcripts for students and submits them to the Law School Admission Council, where they are reviewed and submitted to the desired law schools. The Law School Admission Council also provides students with a number of other resources, allowing them to do everything from register and receive scores for their LSAT online, to assemble their educational credentials and track their law school applications.
While in law school, students are first required to take a number of foundational courses, such as civil law, contracts, torts, property law, and constitutional law. Many students interested in tax law will then likely take specialized courses in topics including business taxation and income taxation. Students that successfully complete law school earn a Juris Doctor (JD) degree.
Once students finish the law school program, they are required to pass a state bar exam for each state/jurisdiction in which they wish to practice tax law. Some states require students of law to pass an ethics examination before they can receive a license to practice. The state bar, which is administered by the National Conference of Bar Examiners, is a six-hour exam that covers a wide variety of legal topics. There are a number of different exams that are part of The Uniform Bar Examination, and each jurisdiction has its own set of guidelines regarding which tests are mandatory.
Internal Revenue Service’s Enrolled Agent Program
Tax attorneys who will represent clients regarding IRS matters must become Enrolled Agents (EAs) through the Internal Revenue Service’s Enrolled Agent Program. Lawyers interested in becoming EAs must pass a three-part exam covering the topics of individual and business tax returns. They must also observe certain ethical standards and complete 72 hours of continuing education courses every three years. Once tax attorneys have become EAs, they are granted unlimited practice rights when representing clients before the IRS.
The Masters of Laws (LLM) Program
The Masters of Laws (LLM, which stands for Legum Magister, meaning “masters of law” in Latin) is an internationally recognized, postgraduate law degree. This one-year program, which is pursued electively by students who have already earned a JD degree, allows students of law to focus on a specific area of interest and gain valuable training in a specialized field of law. For tax law students, this may include international business, international taxation, financial services, general business taxation, or estate planning, just to name a few. Although the LLM degree is not required, and by itself does not mean a graduate can begin practicing law, it shows employers that the law student has mastered a specific area of law.
To successfully complete an LLM program, most university programs require specific courses of study, research-oriented study, and the completion of a thesis. Although many LLM programs are full-time, some universities offer part-time programs for law professionals interested in obtaining their LLM while working full-time.
Tax Attorney Salary and Earning Potential
According to the 2018 Robert Half Salary Guide for Legal Professionals, the midpoint starting salary for a first year associate at a law firm falls within the range of $54,500 – $121,000, with a midpoint of $68,000. After at least four years experience, the expected range is $80,750 – $195,250 with a midpoint of $101,250. With ten or more years experience that range jumps to $101,750 – $218,000 with a midpoint of $124,500.
Very often, however, tax attorneys work in-house for corporations and command even higher salaries. An associate just starting out could expect a median salary offer of $90,000 all the way up to $168,000 for the top five percent. With 4-9 years experience, starting offers would reach $109,000 at the mid[point and $190,750 for the top five percent. In the same position, with at least 10 years experience, that midpoint starting salary jumps to $138,000, with an upper range of $169,750 – $255,750 (75th–95th percentile).
The United States Department of Labor, Bureau of Labor Statistics, through its Occupational Outlook Handbook, 2018 Edition, reported that the median annual income for a lawyer was $120,910 while the top ten percent earned more than $208,000.
That year, the industry classifications with the highest levels of employment for lawyers, according to the United States Department of Labor were (national mean annual income):
- Legal services – $150,200
- Local government – $106,120
- State government – $92,270
- Federal Executive Branch – $140,790
- Management of companies and enterprises – $178,090
The highest earners were those practicing in (mean annual income):
- California – $171,550
- New York – $167,110
- Florida – $128,920
- Texas – $150,250
- District of Columbia – $192,530
The top paying industries where lawyers played a role in tax consultancy in 2018 included specialty areas outside of conventional practice. Very few attorneys occupied these niches, but those that did out-earned their colleagues in every other area of practice (national mean annual income):
- Cable and Subscription Programming – $234,310
- Pipeline Transportation of Crude Oil – $215,700
- Motor Vehicle Manufacturing – $205,610
- Computer and Peripheral Equipment Manufacturing – $204,710
- Petroleum and Coal Products Manufacturing – $200,830