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IRS MOVES TO REINSTATE TAX PREPARER REGULATIONS

The Internal Revenue Service has filed with the Federal District Court and Appeals Court that it intends to appeal a judge’s ruling that struck down the mandatory testing and continuing education requirements for its Registered Tax Return Preparer Act.

The IRS set up this Registered Tax Return Preparer system known as RTRP to improve the quality of those doing tax returns. However, last month U.S. District Judge James Boasberg of the District of Columbia ruled against the IRS. Three different tax preparers filed suit against the Internal Revenue Service attempting to strike down this regulatory scheme. The suit is known as Loving v. The IRS. In reality, the suit was brought by the Institute for Justice, which is a libertarian law firm in Arlington, Virginia. The suit argued that the Service lacked the statutory authority to impose these requirements on all tax return preparers. Essentially, the requirements sought to make the preparers pass a competency exam and then continue with educational courses. Judge Boasberg agreed with the Plaintiffs, and the IRS then announced that it intends to appeal this ruling.

The IRS also asked Judge Boasberg to suspend his ruling claiming that it would disrupt this tax season. Surprisingly, the Judge denied the IRS’ request. However, he did clarify the ruling and allowed the IRS to reopen its Preparer Tax Identification Number. This is actually known as a PTIN and is an online registration system for tax preparers. The Judge said that tax return preparers can take the competency test and can also do continuing education. However, it has to be voluntary; the IRS cannot require them to do so.

Last week the IRS filed an actual Notice of Appeal in both the District Court and the D.C. Circuit Court of Appeals. There are many technicalities that have to be dealt with through the appellate process, but it is safe to say this argument will go on for some time and stands in the way of a major IRS program.