News and Insights

Internal Revenue Service Abandons Effort to Regulate Tax Preparers

Tax Development May 18, 2014

The Internal Revenue Service’s fight to regulate tax preparers has come to an end. In January of last year, a federal judge ruled the Internal Revenue Service (IRS) had overstepped its statutory authority when it attempted to regulate tax preparers, which for all intents and purposes put an end to the IRS’s Registered Tax Return Preparer Program. Then in February of this year, the Court of Appeals for the District of Columbia (the “Court of Appeals”), in the case of Loving v. Internal Revenue Service, affirmed an order of the District Court enjoining the IRS from enforcing regulations related to paid tax-return preparers. The Court of Appeals, based on its own textual and historical analysis of the statutory authority, concluded that tax-return preparers were not in the practice of representing tax payers before the Department of Treasury. On this basis, it agreed with the District Court that the IRS does not have the authority to regulate paid tax-return preparers and held that the District Court’s order of enjoinment would stand.

The next step for the IRS would have been to submit a petition seeking review from the Supreme Court. However, the deadline for such a submission has passed. As such, this final chapter in the IRS’s attempt to regulate paid tax-return preparers comes to a close.


Jeremiah T. Lynch