IRS Fires Back

The IRS has fired back against tax preparer responses concerning a recent motion it filed in the case of Loving v. IRS – a lawsuit three preparers filed against the IRS charging it does not have the authority to require tax preparers to pass a competency test and meet continuing education requirements.

The IRS asked the appeals court to suspend the ruling and received backlash from the plaintiffs who continue to argue against the IRS’s RTRP (Registered Tax Return Preparer) program.  The IRS followed the backlash with a statement that included, “Absent a stay, the injury resulting from the District Court’s injunction will be irreparable.”   It continued, “The regulations are intended to safeguard taxpayers from incompetent and unethical tax return preparers, who annually cost the taxpaying public billions of dollars. Thus, there is no merit to plaintiffs’ flippant remark that, because before the issuance of the regulations in question there was no regulation of return preparers for the prior 100 years, no harm would come to the Treasury or the taxpaying public from delaying the regulation of return preparers for one more year. The problem of unregulated return preparers obviously represents a major public concern.”

If the IRS does recognize that if the court were to reverse the District Court’s decision before the end of the year, a flood of hundreds of thousands of tax preparers will need to pass a competency exam and complete continuing education requirements, which would very likely force it to extend the deadline for meeting requirements for another entire tax filing season.  They insist even this delay would be a move forward as the reasons for the implementation of the RTRP program still exist, as it indicated in this statement: “Paid tax return preparers are advising their clients about the tax law and how to report their clients’ financial data to comply with the tax law. And a significant number of them are providing incompetent or unscrupulous advice, as the National Taxpayer Advocate has warned in her annual reports to Congress since 2002.”

So, what’s next?  Right now, everything is in the hands of the D.C. Circuit Court of Appeals. It must set a schedule for further briefings on the appeal.  Once that’s done, it will receive the record of the case from the District Court and then the IRS will have 40 days to file its first brief on the appeal.  In the meantime, both the IRS and the plaintiffs wait on a decision on the ruling, which could come at any time.

 by Kenya Hoffart, Industry Writer