Getting Tax Help

IRS suspends tax return preparer rules after court defeat

Bloomberg NewsJanuary 23, 2013 

— The Internal Revenue Service has suspended its regulation of tax-return preparers after a federal court ruling that said the agency lacked authority to run the program.

Hundreds of thousands of tax-return preparers as a result won’t have to register with the government, pass a competency test or meet continuing-education requirements.

“The Internal Revenue Service, working with the Department of Justice, continues to have confidence in the scope of its authority to administer this program,” the agency said in a statement on its website. “It is considering how best to address the court’s order and will take further action shortly.”

U.S. District Judge James Boasberg in Washington invalidated the regulations in a decision Jan. 18 and enjoined the IRS from enforcing them. Boasberg, who was nominated by President Barack Obama, wrote that the IRS overstepped its authority by relying on an 1884 law that allowed it to regulate people presenting cases before the Treasury Department.

“Filing a tax return would never, in normal usage, be described as ‘presenting a case,’” he wrote. “At the time of filing, the taxpayer has no dispute with the IRS; there is no case to present.”

The rules were designed to impose standards on hundreds of thousands of return preparers who aren’t certified public accountants, attorneys or enrolled agents already licensed to practice before the IRS. The idea, promoted by former Commissioner Douglas Shulman, was to require minimum qualifications and help the agency combat tax fraud.

Intuit, which makes TurboTax, was “disappointed” by the ruling, Dan Maurer, senior vice president and general manager of the consumer tax group, said in a statement today.

“The public interest is best served when all competing tax-service providers meet high standards,” he said.

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