CPAs and financial planners shouldn’t offer legal advice

Oftentimes, tax and financial issues can intersect with legal issues. It can be tempting for accountants and financial planners to field legal questions in an effort to better meet the needs of their clients. However, doing so may cross the line into providing legal advice. Unless the person giving the advice is a licensed attorney, one may face charges of practicing law without a license or face other consequences.

What constitutes “legal advice?"

There are differences in state law as to what constitutes legal advice. Generally speaking, only a licensed attorney should:

  • Interpret court rulings and opinions
  • Weigh in on another’s legal advice
  • Provide a service requiring legal knowledge or skill

Things get more complicated when it comes to the work of CPAs. Because CPAs can represent clients before the IRS, they necessarily must interpret some facets of tax law. However, tax law issues are often intertwined with other legal areas, such as estate planning and business valuation, and it can be easy to unwittingly wander into unauthorized legal advice territory.

Those who provide legal advice and who aren’t licensed attorneys face the threat of serious criminal and civil penalties. CPAs, financial planners and their clients would all do well to avoid crossing any questionable lines. If it appears that a matter may require legal counsel, err on the side of caution and turn to a lawyer. CPAs, financial planners and attorneys can better meet the needs of their clients when everyone works together.

If you are looking for an experienced tax and commercial law firm with which to form a professional relationship, please contact our law firm to discuss your circumstances.

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