One Advisor, Two Licenses: Attorney and CPA
Hani H. Khatib is licensed as an attorney and as a Certified Public Accountant and holds an LL.M. in Taxation. This page explains what a CPA attorney changes for you, and where the advantage ends.
A CPA is licensed by the state (in Illinois, by the Department of Financial and Professional Regulation); an attorney by a state supreme court. In Illinois nobody may practice law or charge for legal services without that license (Attorney Act, 705 ILCS 205/1). Side by side:
| What you need | Attorney | CPA who is not a lawyer | Attorney-CPA |
|---|---|---|---|
| Prepare and file tax returns | Yes, though courts treat it as accounting work, not legal advice | Yes, core work | Yes |
| Represent you before the IRS in an audit, appeal or collection matter, once you sign Form 2848 | Yes, unlimited representation rights under Circular 230 | Yes, the same rights | Yes |
| Draft a will, trust, deed, operating agreement or purchase contract | Yes | No, this is the practice of law | Yes |
| Appear for you in Illinois circuit court | Yes | No | Yes |
| Appear for you in the U.S. Tax Court | Yes, on admission to that court's bar | No, unless the CPA passes the court's non-attorney examination (Tax Court Rule 200) | Yes, on admission |
| Keep your communications privileged | Yes, attorney-client privilege, held by you, when you are seeking legal advice | No, apart from 26 U.S.C. 7525 in noncriminal federal tax matters; the Illinois privilege belongs to the accountant | Yes, for legal advice; not for return preparation |
One person with both licenses covers every row, with the limits explained under privilege below.
In these matters the legal document and the tax result are the same decision.
- Selling or buying a business. The purchase agreement decides whether assets or ownership interests change hands, and both sides must report how the price is allocated among the assets on Form 8594 when goodwill or going-concern value is involved. See buying or selling a business.
- Electing S-corporation status. Form 2553 is due no more than two months and 15 days after the start of the tax year it covers, or any time in the preceding year; late elections need a reasonable-cause showing. The election also changes how the owner is paid, which the operating agreement must reflect. See S-corp election.
- A 1031 exchange. Replacement property must be identified within 45 days of transferring the property given up and received within 180 days, or by the due date of the return including extensions if that is earlier. See 1031 exchange attorney.
- Estate and gift planning. Property acquired from a decedent generally takes a basis equal to its date-of-death value (26 U.S.C. 1014), so how an asset is held matters as much as who gets it. Under the Illinois Estate and Generation-Skipping Transfer Tax Act, 35 ILCS 405, Illinois imposes its own estate tax once an estate exceeds a $4,000,000 exclusion amount, which is a threshold, not a credit. See business succession planning and the estate planning hub.
- An IRS or Illinois dispute. Who represents you decides what stays confidential, what can be said to the agent, and whether the matter can go to court if the administrative route fails. See tax attorney.
- A property tax appeal. The appeal is argued on valuation evidence and the assessment statute at once. Appeals that do not need a lawyer go to Cook County Tax Appeals LLC, the sister company built for them; appeals that do, such as those for entity-owned property, stay with the firm.
This is the point most often oversold.
Attorney-client privilege protects confidential communications between you and your lawyer made to obtain legal advice. You hold it and you decide whether it is waived. There is no equivalent accountant-client privilege at federal common law; the U.S. Supreme Court declined to shield even an accountant's work papers (United States v. Arthur Young & Co., 465 U.S. 805 (1984)).
Congress later gave federally authorized tax practitioners, including CPAs, a narrow statutory privilege. Under 26 U.S.C. 7525 it covers tax advice only in a noncriminal tax matter before the IRS or a noncriminal federal tax case brought by or against the United States, and never written communications promoting a tax shelter. It does not reach a criminal investigation, an Illinois Department of Revenue audit, a divorce or a business dispute.
Illinois has its own rule. Section 27 of the Illinois Public Accounting Act (225 ILCS 450/27) says a licensed CPA shall not be required by any court to divulge information obtained in a confidential capacity as a CPA. In Brunton v. Kruger, 2015 IL 117663, the Illinois Supreme Court held that this privilege belongs to the accountant, not the client: the accountant decides whether to invoke it.
So the accurate claim is this. When Hani advises you as your lawyer on what the law requires, what your exposure is and what to do about it, that advice is privileged, tax content included. The return itself, and the numbers assembled to prepare it, are not privileged for anyone. A lawyer who is not an accountant can reach a similar result only by engaging an accountant to work under the lawyer's direction (United States v. Kovel, 296 F.2d 918 (2d Cir. 1961)): a second engagement and a second bill.
In a two-firm arrangement the lawyer drafts and the accountant checks, or the accountant plans and the lawyer papers it, and each relies on the other's summary of the facts. Questions fall between the desks: whether the trust should hold the rental property, whether the sale should be of assets or membership interests, whether the owner's salary after an S-election is defensible. Here the person reading the trust instrument is the person who will read the Form 1041, so the question is asked while the document is still a draft. You give the facts once, and one engagement letter covers the legal work and the tax analysis that goes with it.
A CPA's representation ends at the administrative level unless the CPA is separately admitted to a court. An attorney can carry the same matter into Illinois circuit court, the Illinois Independent Tax Tribunal or, on admission, the U.S. Tax Court, and can advise from the start with that possibility in mind: what is said to the agent, what is put in writing, and when to end negotiations. Most matters never get there, but the route shapes the early stage.
Hani H. Khatib is an attorney licensed to practice law in Illinois and a Certified Public Accountant, and he holds an LL.M. in Taxation. Both licenses are public records: Illinois lawyer registration can be checked through the ARDC lawyer search, and Illinois professional licenses, including CPA licenses, through the IDFPR license lookup. "Attorney-CPA" on this site describes a person who holds both licenses; it is not a certification, and the Supreme Court of Illinois does not recognize certifications of specialties in the practice of law.
Khatib Law LLC is a law firm. Tax-related work described on this site is delivered as part of the firm's legal services; Hani H. Khatib, the firm's principal, is also a licensed CPA. The about page has the rest of his background; to talk through a decision with him, use the contact page.
Questions
Questions we are asked
What is the difference between a tax attorney and a CPA?
A CPA is licensed by the state (in Illinois, by the Department of Financial and Professional Regulation) to practice accounting; preparing returns and representing taxpayers before the IRS are core CPA work. A tax attorney is licensed by a state supreme court to practice law: drafting trusts, entity documents and contracts, giving privileged legal advice, and representing you in court. The two overlap at the IRS, where both have unlimited practice rights under Circular 230. They do not overlap in court or in drafting legal documents, which only a lawyer may do.
When do I need a tax attorney rather than a CPA?
When the matter could end in litigation or a criminal referral, when you need advice that stays privileged, when a legal document has to be drafted (a trust, an operating agreement, a purchase agreement, a deed), or when the dispute is with the Illinois Department of Revenue rather than the IRS, where the federal practitioner privilege does not apply. For routine return preparation and a straightforward correspondence audit, a CPA is often enough. An attorney-CPA covers both lists without a hand-off.
Can a CPA represent me before the IRS?
Yes. Certified public accountants, enrolled agents and lawyers all have unlimited representation rights before the IRS under Treasury Circular 230, so a CPA can handle an audit, an appeal or a collection matter for you once you sign Form 2848, the IRS power of attorney. What a CPA who is not a lawyer cannot do is take the dispute into Illinois circuit court, or into the U.S. Tax Court without first passing that court's non-attorney admission examination.
Is my conversation with a CPA privileged?
Only partly. Federal law gives communications with a CPA the same protection as communications with a lawyer, but only for tax advice in noncriminal matters before the IRS or in noncriminal federal tax cases brought by or against the United States (26 U.S.C. 7525). It does not cover criminal investigations, state tax matters or other litigation. Illinois has its own accountant privilege, but the Illinois Supreme Court has held that it belongs to the accountant, not the client. Advice from your lawyer is covered by attorney-client privilege, which you control.
What is an LL.M. in Taxation?
A master of laws degree in tax law, taken after the J.D. It is an academic degree, not a license or a certification, and Illinois does not recognize specialty certifications in law. In practice it means a year of graduate study in federal income, estate and gift, partnership and corporate tax, which is the material a lawyer needs when a trust, a business sale or an IRS dispute turns on the Internal Revenue Code.
Does hiring one attorney-CPA cost less than hiring both?
Not necessarily per hour, and we do not quote fees on this site. What it removes is duplication: one set of facts gathered once, one analysis instead of two that have to be reconciled, and no second bill for a lawyer to engage an accountant under his direction so the accountant's work is privileged. Every fee is stated in a written engagement agreement before work begins, and unearned fees are refundable.
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