Tax Lawyer, Tax Consultant, and Tax Accountant – What is the Difference?
Most Canadians get jittery when they realize that tax season is around the corner —and the apprehension is understandable. Tax filing can be a complex subject for the average taxpayer to wrap their head around. But you need not worry. Find out about the best tax professionals that will handle your specific tax situation.
Only a few things are as sticky as dealing with a tax liability. The average Canadian taxpayer risks complicating their tax situation if they fail to hire the right tax professional to help them resolve their tax issue. If you can’t afford to pay your taxes, your probably not alone; according to this news article on late filing tax penalties. In this CBC article, CRA uncollected tax debt is at about $44 billion as of 2018! With the CRA charging 5 percent interest, that’s $2.2 billion in unnecessary interest payments, Canadians owe the government each year. Likely, you are here because of worries about your own tax debt to the CRA. Read on to learn how Cawston & Associates can help you.
Three primary tax professionals are highly knowledgeable about resolving complex tax issues: tax lawyers, tax consultants, and tax accountants.
But, who do you need in what tax situation, and when?
In this post, we will describe the duties of a tax lawyer, a tax consultant, and a tax accountant in a way that makes it super easy for you to realize who to call when trying to surmount a tax-related barrier, whether it’s about filing a tax return, resolving a tax dispute, or just getting relevant tax advice.
Who Is A Tax Lawyer?
A tax lawyer is a person who has been trained to handle issues arising from the compliance or non-compliance of tax laws. As you know, every Canadian resident must obey the law by paying their fair share of taxes. A tax lawyer helps you obey convoluted tax laws by ensuring you are in the correct tax position with the law.
Tax lawyers are highly coveted tax professionals. They can help you structure your tax liability in a way that takes advantage of the law. They also have an excellent understanding of Canadian tax laws, whether it’s a federal tax law like the Income Tax Act or a provincial tax like the Harmonized Sales Tax (HST) Act.
Tax lawyers can also help you defend your tax position if you get into a dispute with the Canadian Revenue Agency (CRA), and they can represent you in the extreme case that you need to defend your tax position in court.
When Do You Need A Tax Lawyer?
Tax lawyers are primary there to deal with any legal questions that a client may have regarding the preparation of their tax returns. There may be specific claims on a tax return where it is not clear if those claims are truly eligible. A tax lawyer can help advise you on these claims and if they would stand up in court.
In fact, any time that you are considering using a court process to deal with the CRA a tax lawyer is your best option.
In situations where you need to work with a collection officer to come to a payment arrangement a tax lawyer is very cost prohibitive. These are the situations where you may want to hire a good tax consultant.
If you have been accused of doing something criminal a tax lawyer, or any lawyer should be contacted immediately.
Types of Tax Lawyers
There are a variety of tax lawyers to choose from, and it all depends on the sort of tax service you need. Tax lawyers usually specialize in various tax fields, including corporate tax, partnership tax, international tax, state and local tax, income tax, estate, and gift tax, employee benefits and executive compensation tax, and many more.
Tax lawyers are experts in tax court disputes and settlements, so feel free to make inquiries and hire the best tax lawyer to help you resolve your tax situation.
Who Is A Tax Consultant?
Cawston & Associates Inc. is a Tax Consultant.
Cawston & Associates Inc helps people file their late taxes. They do not normally do current simple tax filings.
Experienced tax consultants, like Cawston & Associates Inc have specialized knowledge about the Canadian tax system. They advise people on strategies to help them meet their tax obligations to ensure they do not overpay or underpay their taxes.
A tax consultant like Cawston & Associate Ince should not be confused with a tax preparer. A tax preparer (or enrolled agent) prepares income tax forms like the T1 and the T4. A tax preparer must use the CRA’s EFILE system to design their tax forms and meet the CRA’s suitability screening.
However, a tax consultant, like Cawston & Associates Inc has more profound expertise in the tax system than the tax preparer.
Tax consultants assist people in dealing with complex tax issues. Consultants like Cawston & Associates Inc do, Voluntary Disclosures, payment arrangements, tax preparation, audit representation, CRA driven bankruptcy representations, filing notices of objections etc.
Typically, people who are unsure of their tax position, like self-employed people, business owners, beneficiaries of trusts, and clergy people, would all be wise to seek the professional service of tax consultants.
Tax consultants are usually professionals in accounting or tax law and a myriad of other certifications that give them deeper insight into how the tax system works.
When Do You Need A Tax Consultant?
The main goal of a tax consultant is to resolve tax disputes without the need to go to court.
Tax consultants, like Cawston & Associates Inc offer a wide array of services for tax remittance purposes.
If you want to collect your tax documents, prepare your tax returns, evaluate your tax liability, manage your tax position during a marriage, divorce, death, or other life circumstance, complete a complex tax form or need an expert to represent you, like Cawston & Associates Inc, in a negotiation with the CRA, then a tax consultant should be your go-to.
If you need to file taxes for multiple tax years, owe federal tax need to deal with bank levies, wage garnishments, payroll tax issues, or business tax issues, someone like Cawston & Associates Inc, a tax consultant remains a suitable tax professional to allay your fears.
If you receive a notice of reassessment or if you disagree with the Canada Revenue Agency a tax consultant can help with the resolution of that tax dispute.
Types of Tax Consultants
Many tax consultants worked for the Canada Revenue Agency. Some consultants have accounting backgrounds, others have legal backgrounds. There are no specific designations for tax consultants.
Who Is A Tax Accountant?
A tax accountant is a person who helps people file their tax returns in creative ways that meet their client’s financial situation and complies with the law. Tax accountants monitor their client’s financial needs and then prepare their client’s tax returns in ways that help their client achieve their financial goals without breaking the tax law.
A tax accountant is particularly helpful if you are in a complicated tax situation, but you still need to file your tax returns. If you are divorced, have children, own a business, have multiple investments, or you’re a high net-worth individual, then having a tax accountant prepare your tax returns is a sound decision. If the CRA decides to audit you, a tax accountant can also prepare you for that occasion.
Tax accountants are highly sought-after professionals, and they are skilled at helping people navigate complex tax processes. All tax accountants have had to pass the rigorous Certified Public Accountant (CPA) examination, and they continually educate themselves even after being certified.
This means they have enough training, experience, and know-how to help you regularize your tax position.
When Do You Need A Tax Accountant?
The more cash flow your lifestyle or business demands, the more you need to employ the services of a tax accountant. A tax accountant is an expert at reducing your tax liability while ensuring that you comply with all relevant laws.
The job of ensuring that you comply with tax laws while filing your tax returns is crucial, but you can face penalties with the CRA if it is found out that you deliberately underpaid your share of taxes.
Crucially, if you want to come up with a long-term financial plan in a way that suits your financial situation, then a tax accountant is the right professional to employ. A tax professional can develop a long-term tax plan that allows you to invest in certain tax-deductible items. This way, you can enjoy all the financial advantages provided by the law while filing your taxes.
A tax accountant can help you research and maintain tax and financial records, stay up to date with tax laws and regulations, prepare tax forms and documents, ensure that your financial documents comply with relevant tax laws and regulations, monitor and respond to communications with tax authorities like the CRA, use accounting procedures to identify potential tax risks for fraud, identify taxes owed to you, assess your financial information to identify systemic risks, and do many more things.
Tax lawyers typically have an hourly rate of $300.00 – $1000.00 per hour. Most lawyers will want a retainer up front. Depending on the time involved to prepare for court, and the actual court time itself the costs can be significant. The cost to go to tax court can exceed over $10,000.00.
Tax consultants charge both on an hourly basis and a flat rate basis depending on what is required. Cawston and Associates Inc. works with each client to make sure they understand in advance what to expect for costs. It’s important for a tax consultant to make sure there is a proper cost / benefit analysis before they engage with the Canada Revenue Agency.
A tax accountant will normally charge somewhere between $150.00 – $1000.00 per personal tax return and $1,500.00 – $10,000.00 depending on the complexity of the return or the bookkeeping required.
As you can see, a tax lawyer performs a different function from a tax consultant, and a tax accountant performs vastly different functions from the first two professionals.
A tax lawyer is primarily concerned with resolving tax disputes that need to go to court, while a tax consultant like Cawston & Associates Inc. will provide you with the best tax advice to help you avoid going to court. Tax Consultants usually have Tax Accountants, Bookkeepers, and Tax Lawyers to assist if needed. Meanwhile, a tax accountant’s primary job is to help you with your future tax planning and strategy.