Drake Software blog for tax pros, covering tax, IRS news, and more

IRS Drops Effort To Regulate Tax Preparers

IRS Drops Effort To Regulate Tax Preparers

IRS Drops Effort To Regulate Tax Preparers 

The Internal Revenue Service has elected to discontinue its efforts to regulate tax preparers, allowing the deadline to pass for an appeal to the US Supreme Court. 

Implemented in 2012, the Registered Tax Return Preparer program would have required anyone who is compensated for preparing tax returns to pass a basic competency exam and take 15 hours of continuing education each year.  Enrolled agents, lawyers and certified public accountants were exempted from the regulations. 

The IRS effort was immediately challenged in court, and in January of 2013 a US District Judge struck down the program, ruling that the IRS has no statutory authority to impose the regulation.  That decision was upheld by the Court of Appeals in February of this year.  The IRS had until this week to appeal the decision to the Supreme Court, but elected not to do so. 

The Institute for Justice, which handled the case on behalf of three tax preparers, argued that the regulations would have imposed new and unnecessary compliance burdens that would have benefitted the large franchise tax preparation firms and other interests to the detriment of independent, community-based preparers.  In addition, the Institute noted, it would limit competition by pushing some preparers out of the industry due to the cost and inconvenience of the continuing education requirements. 

The program could still be revived in the future, but only if Congress gives the IRS the authority to do so.  Several bills have been introduced to do so in the past, but none have been approved.  Nor is such a bill likely in the near term, given the current relationship between the IRS and the Congress.  The continuing scandal over use of the IRS for political purposes and the agency’s poor record of tracking payments have caused some members of Congress to question its ability to handle more authority.



Sources:  San Francisco Chronicle at http://www.sfchronicle.com/business/networth/article/IRS-misses-deadline-to-appeal-tax-preparer-rules-5475521.php; Washington Examiner at http://washingtonexaminer.com/irs-gives-up-on-using-horse-act-against-independent-tax-preparers/article/2548373

admin taxing_subjects