In American Institute of Certified Public Accountants v. Internal Revenue Service, No. 16-5256 (D.C. Cir. 8/14/18), the Court of Appeals for the D.C. Circuit recently held that the AICPA had standing to challenge the IRS’s voluntary Annual Filing Season Program. However, the court held for the IRS on the merits and allowed the agency to continue the program, which had already gone into effect while the AICPA challenge was pending.
The appellate court sent the case back to the D.C. Circuit to enter judgment for the IRS.
The case turned on a “longstanding IRS effort to address perceived problems in the market for tax preparation services,” according to the filing. In 2011, the IRS adopted a rule that would have regulated all tax preparers for the first time. That rule was challenged, and the bulk of it was enjoined by the district court in Loving v. IRS.
In the wake of the Loving litigation, the IRS instituted a voluntary strategy known as the Annual Filing Season Program. This allows unenrolled tax preparers to distinguish themselves from enrolled ones and have limited rights to represent taxpayers in IRS audits of tax returns.
The AICPA challenged the annual program in district court, saying it violated the Administrative Procedure Act (APA). The district court initially dismissed the case for lack of constitutional standing (Am. Inst. of Cert. Pub. Accnts. v. IRS, No. 14-1190, 2014 WL 5585334 (D.D.C. Oct. 27, 2014) (AICPA I)).
The appellate court reversed that decision, and, on remand, the IRS sought judgment on the pleadings, arguing the AICPA lacked statutory standing. The district court granted the motion, which the AICPA appealed.
The appellate judges reversed the lower court’s decision, saying the AICPA has legal standing to challenge the program because its members employ unenrolled preparers. The appellate judges found the program doesn’t violate the APA in the ways the AICPA contends.
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.