IRS looses round one on

[veritas]

Regulating preparers.

http://hosted.ap.org/dynamic/stories/U/US_TAX_PREP_LAWSUIT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-01-18-18-32-55

[Koss]

Loving et al. v. IRS

I always thought the IRS was on shaky ground.

I am in favor of regulating all paid preparers. But the court concluded that the IRS does not have statutory authority to impose the regulatory scheme that governs RTRPs. If the decision stands, Congress will have to act in order to grant such authority to the IRS.

The federal district court issued a permanent injunction that bars the IRS from collecting fees for PTIN registration, and from enforcing the examination and continuing education requirements.

The IRS will almost certainly appeal the decision. The question now is whether the appeals court will temporarily block the injunction, and allow the IRS to continue enforcement of the regulations during the appeals process.

Here's a link to the decision:

http://tinyurl.com/erhy42

The decision is 22 pages. This is relatively short, considering the complex issues involved. It is a very well written, and very well reasoned decision.

In plain English:

1. The federal law grants the IRS the authority to make regulations that govern those who practice before the IRS.

2. Preparation of a tax return is not practice before the IRS.

3. There is a different section of the US code that provides penalties for tax return preparers.

4. The IRS cannot regulate those who only prepare tax returns, except in the manner provided for in the law.

The decision has no effect on CPAs, enrolled agents, or attorneys. The decision guts the IRS effort to regulate unenrolled preparers.

BMK

[JohnH]

I'm pleased to see the distinction drawn regarding those who PREPARE tax returns. There is a difference between preparing and practicing. There is also a difference between preparing and filing.

[FEDUKE404]

Too little too late

Regulating preparers.

http://hosted.ap.org/dynamic/stories...01-18-18-32-55

I think the IRS has already "loosed" way too much on preparers during the last couple of years.

While I doubt this program will go away, the newest PTIN/RTRP/etc rules may become a bit more flexible.

But as for the current tax season, any tax preparer in his/her right mind would STILL raise fees for the costs already expended to be in compliance with the current IRS rules.

FE

[Y2KEA]

Anyone else notice how the writer of the article forgot to include Enrolled Agents as being exempt from the requirements?

I don't toot but if you have a twitter account, you might want to send him a message. @MattBarakat

[veritas]

I'm conflicted on this issue

My libertarian instincts rejects more government regulation. But then crony capitalism raises it's ugly head saying, regulate, regulate my competition to extinction.

[dtlee]

Thanks for the link

Burton,

Thanks for the details, and I echo your sentiments. In redefinining "practice" they extended coverage of a lot of their rules and gave themselves authority to suspend practitioners for actions related to tax preparation. In addition, they gave themselves the ability to shut down a practitioner from preparing returns if they were under suspension. I wonder if this ruling impacts those extensions of power.

A few years ago when New York State started charging fees to preparers, some EAs here took the stand that they were licensed to prepare tax returns by the IRS and not under state control (spent a few pennies on lawyer fees pushing that point, too). No one here seemed to understand at that time that practice authorization by the IRS was not covering tax preparation. Any time I said anything, I was told, "Of course it does." That was probably when I started becoming persona non grata in that group. It didn't then, and this court thinks it is not enough for the IRS to simply decide that it does.

I am very interested in how this turns out and what the repercussions will be.

[taxea]

I think the IRS has already "loosed" way too much on preparers during the last couple of years.

While I doubt this program will go away, the newest PTIN/RTRP/etc rules may become a bit more flexible.

But as for the current tax season, any tax preparer in his/her right mind would STILL raise fees for the costs already expended to be in compliance with the current IRS rules.

FE

More flexible...not from what I have been reading. It appears that the IRS' future intent is to limit the type of returns a preparer can file based on whether that preparer has proven (passed a test) the ability to properly complete various types of returns. They have already separated 1040's with Sch C and without. I predict the next step will be the different types of business returns, and, maybe even, payroll, 1041 and 706.

[taxea]

Anyone else notice how the writer of the article forgot to include Enrolled Agents as being exempt from the requirements?

I don't toot but if you have a twitter account, you might want to send him a message. @MattBarakat

They probably don't know what EA's are any more than the general public does.

[AZ-Tax]

IRS may have other ave's

Regulating preparers.http://hosted.ap.org/dynamic/stories...01-18-18-32-55

"The Institute for Justice argued that the IRS lacked the statutory authority to impose the regulations and said they would put tens of thousands of mom-and-pop tax preparers out of business, because the regulations were onerous and create a competitive disadvantage to the attorneys and CPAs who were exempt"

What disadvantage? EA's, Atty's & CPA's already have regs to follow, fees to pay & cont ed and now with this ruling, EA's, Atty's & CPA's may have a disadvantage in the fees they charge due to all the fees their subject to for which the un registered, un enrolled is not subject to.

I think all of us that are either a EA, RTRP and/or CPA knows our Profession needs competency exam, cont ed, registration etc. Maybe the IRS has more tricks up their sleeve like that public database of EA's and RTRP's and promote it to the public thus promoting those designations. There also maybe other avenues the IRS could take to favor the EA & RTRP to the point the un enrolled & un registered will eventually cave unless of course that gets struck down by a judge.

One of the instructors at the EA class I attended I think obtained their EA via the IRS law that allows IRS employees with # of yrs experience with the IRS to be issued an EA w/o having to sit for the exam. He told the class I was in that once you obtain your EA, you will belong to this special club or group and from what I gathered he said, the IRS looks favorably upon EA's. Since I recieved my EA certificate, I have been placing the EA behing my name on all 8821's I fax in and maybe its my imagination but the IRS agents I talk to seem to treat me more professionalyl then prior to having my EA.

[sandigi]

To test or not to test

I am a preparer lacking other titles. The education requirements has been no burden because I have attended the IRS forums for the past 7 years and acquired more hours than deemed necessary once I became "regulated."

Although I did not need the certificate for my education in prior years, I scanned my badge and got my shiny stars for attendance. Always more than 15 hours. One interesting thing happened in 2012 on my CPE credits from the IRS forum. For the first time in 7 years, 2 of my classes did not show up on my Continuing Education certificate. More regulation from the IRS. Less competence from the IRS regulators. I DID get enough credits to fulfill the requirement because I went to more seminars than I needed, so it did not create a problem this time! However, if it had been one of the "ethics" or "update" classes that had not been credited to me, how am I going to prove it? Call the IRS, and say "Let me send you my "notes"? I did email the IRS and ask about the 2 missing credits and am still waiting for a response . . . well actually I am not waiting because that implies "expecting" and I expect no answer.

Now my dilemma. To test or not to test. That is the question.

[Lion]

Click here for Web version of this message. Please use the Web version if you have any difficulty accessing a hyperlink.
________________________________________
A decision was announced this afternoon regarding the 2012 court case Loving v. IRS, which challenged IRS’ authority to regulate commercial preparers. United States District Court for the District of Columbia Judge James E. Boasberg granted Loving’s motion for summary judgment. The Court is granting a permanent injunction against IRS for what the opinion calls “an invalid regulatory regime.”

As with any legal matter, it is best not to jump to conclusions, particularly in the moments following major decisions. As we sit here on Friday evening, the obvious question is how IRS will respond. In any event, this situation will develop over the next week and upcoming months. NAEA will continue to interpret possible ramifications for enrolled agents and the overall tax community and will share our perspective during the back and forth volleying that promises to ensue.

To read the original complaint, click here.
To read today’s decision, click here.
National Association of Enrolled Agents
1120 Connecticut Ave NW Ste 460
Washington, DC 20036-3953
202-822-6232; 202-822-6270 fax
membership@naea.org; www.naea.org

[ChEAr$]

The IRS hasn't a leg to stand on now what with the declaratory judgement and the judge's granting permanent injunction against the IRS enforcing the RTPR provisions. But I didn't see anything in the decision negating the PTIN requirements.

How could the IRS appeal anyway? They don't have the authority under the 1874 law to include all preparers.

Maybe now congress in it's "finite" wisdom will pass a new law requiring all preparers to register. Now that would stand muster.

[Matt Sova]

Sure to raise someone's ire.

I think that you should either be a CPA, EA or Attorney to complete a tax return, OR work for a CPA, EA or Attorney. Sorry, but if you are good at what you do you can pass the EA exam. Then maybe those that cannot achieve any designation will realize they either a) suck at tax prep or b) start charging reasonable fees instead of completing a return for a fraction of what any reasonable person would charge.

[Uncle Sam]

IRS Loses Round 1

FINALLY - I agree with AZ-Tax - Hallelujah!!!!!!!!!!!!!!
You too, Matt.

This baloney of letting unlicensed practitioners prepare returns with no restrictions - other than a PTIN - just
has to stop. It ruins the playing field for ALL licensed preparers regardless of title.