The United States tax system is complex and in a state of continuous change. The use of taxes as an instrument of economic and social policy and the competing objectives of various interest groups have led to frequent legislative changes in the tax laws.

Certified public accountants (CPAs) advise both individuals and businesses on all aspects of compliance with the tax laws. CPAs are bound by a stringent code of professional ethics and are qualified through their education and experience to provide a wide range of tax services relating to personal and business decisions. They prepare tax returns and related schedules, provide advice on tax issues, help individuals and businesses plan effective tax strategies, and represent taxpayers before taxing authorities.

CPAs' knowledge and training in tax matters and their awareness of new developments and emerging issues enable them to develop effective tax-planning techniques that often result in substantial tax savings. Similarly, they use their experience in tax return preparation to explore the many facets of personal finance or running a business. As tax advisors, CPAs can provide the following services:

Tax consulting

Today's CPAs are problem solvers. They can:

  • Advise on the tax effects of transfers of ownership among family members in a business.
  • Provide income and estate tax counseling with respect to the financial settlements involved in separation and divorce.
  • Design compensation, fringe benefit, and retirement plans for a company.
  • Plan for a change in a corporation's accounting methods.
  • Obtain an advance ruling from the IRS on the tax consequences of a proposed corporate acquisition of the stock or assets of another company.
  • Analyze the tax aspects of investment opportunities.

Personal tax planning

As financial planning experts, CPAs can also develop strategies to meet the long-term needs of yourself and your family.

CPAs' expertise and in-depth understanding of complex tax rules and regulations can help individuals and families improve their tax position and realize significant tax savings.

CPAs have the knowledge to assist in developing an appropriate estate plan for building and preserving assets while minimizing estate and inheritance taxes.

Business Tax Advice

There are tax implications to most business decisions, such as relocation or changes in inventory procedures. Before making such decisions, consult a CPA who can give advice on the tax effects they may have on various types of business organizations such as a sole proprietorship, a partnership, or a corporation.

They offer sound tax and accounting advice in connection with the organization, purchase, sale, or merger of a business. CPAs advise business owners on establishing pension and profit-sharing plans and preparing all types of tax reports for such plans.

Representation Before Tax Authorities

A CPA can act as a client's representative before state and federal tax authorities. A CPA might serve as a personal representative, or reply to correspondence concerning tax returns or provide explanations, schedules, and other documents in tax examinations.

CPAs get involved in specific activities such as the following:

  • Challenging the IRS position regarding issues on which there are conflicting points of view
  • Preparing a protest that cites reasonable cause to abate a penalty assessed to an individual for the late filing of a tax return
  • Presenting oral and written arguments before an IRS appeals conference

Other Tax Services

The CPA is an important part of your professional advisory team and a CPA's advice is essential for special projects. For example, a tax consulting engagement for a commercial real estate venture will involve the CPA in consultations with the developers, syndicator, investment bankers, architects, construction engineers, and attorneys.

In a pension and profit-sharing plan engagement, the CPA will work with actuaries, attorneys, insurance company representatives, trustees of the plan, and investment counselors.

Whether you're concerned about your personal tax return, looking at your company's finances, or assessing your financial goals, CPAs are the professionals trained to give you sound advice.

Prepared by the Communications Division, American Institute of Certified Public Accountants © 1989 AICPA, Inc.

The CPA as...

The CPA working in...

  • Business and Industry

  • Government and Nonprofits