On February 11, 2014, the U.S. Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”), in the case of Loving v. Internal Revenue Service, affirmed an order of the District Court enjoining the Internal Revenue Service (IRS) from enforcing regulations related to paid tax-return preparers. The subject regulations were issued by the IRS in 2011 and purported to require paid tax-return preparers to pass a qualifying exam, pay annual registration fees, and meet certain professional continuing education requirements.
The IRS argued it had authority to regulate tax-return preparers based on 31 U.S.C. § 330, which authorizes the IRS to “regulate the practice of representatives of persons before the Department of Treasury.” The Court of Appeals disagreed, describing the IRS’s interpretation as “expansive, atextual, and ahistorical.” Based on its own textual and historical analysis of the provision, the Court of Appeals found that tax-return preparers are not in the practice of representing taxpayers before the Department of Treasury. For this reason, the Court of Appeals agreed with the District Court that the statute does not authorize the IRS to regulate tax-return preparers. Accordingly, it affirmed the District Court decision.
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Jeremiah T. Lynch
- Transaction Tax