IRS Wants Tax Preparer Licensing Injunction Suspended

By Frank Byrt

The IRS hasn't given up its fight to regulate independent tax preparers. It has asked a federal court to suspend the federal court injunction issued last week that blocked the IRS effort until a new motion can be filed.
 
"The Internal Revenue Service, working with the Department of Justice, continues to have confidence in the scope of its authority to administer this program," the IRS said in a statement posted on its website on January 25. "Regardless of the outcome of that request, an appeal is planned within the next thirty days. The IRS is continuing to evaluate the scope of the court's order in determining consistent next steps."
 
On January 18, the US District Court for the District of Columbia granted an injunction that blocked the IRS effort to impose the Registered Tax Return Preparers (RTRP) program, which would require that independent tax preparers obtain a Preparer Tax Identification Number (PTIN), pass a competency test, pay an annual application fee, and complete fifteen hours of continuing education annually. 
 
The IRS effort is aimed at eliminating from the tax preparation industry what it sees as individuals ill-equipped for the task. 
 
Under the IRS RTRP program, only registered tax return preparers would be authorized to prepare and sign federal tax returns beginning January 1, 2014. Attorneys, certified public accountants, and enrolled agents would be exempt from the requirements. 
 
Dan Alban, an attorney for the libertarian public interest law firm Institute for Justice, which represented the three independent tax preparer plaintiffs challenging the regulations, told AccountingWEB, "We think the (IRS) motion is groundless, and we plan to continue fighting this unlawful licensing scheme. We'll continue to fight for the rights of our clients and the tens of thousands of independent tax preparers nationwide."
 
In a January 24 press release, Alban said the IRS motion isn't about protecting the public interest, but rather "about collecting money for the IRS and enriching special interests by using government force to protect them from competition." 
 
Alban added that the IRS "would extract about $4 million each month from tax preparers under a licensing scheme that a federal judge has already found unlawful."
 
"The IRS's legal brief in support of its motion admits that the agency has already received 'over $100 million' in user fees from tax preparers, while only spending about $50 million to implement the regulations," according to the Institute for Justice press release. "Meanwhile, the IRS objects to spending the much smaller sum of $238,000 simply to notify tax preparers of the judge's ruling in this case."
 
According to Alban, a federal judge said the IRS motion for a stay will be heard by the court on an expedited basis. The Institute for Justice plans to file an opposition brief on January 29, and the IRS will be able to reply to that brief as soon as January 31.
 
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