In a terse, one-page letter ruling last week, the D.C. Circuit Court of Appeals denied the Internal Revenue Service’s renewed request to stay the lower court’s injunction of its efforts to license independent tax preparers in Loving v. IRS. The IRS failed to satisfy “the stringent requirements for a stay pending appeal” was the court’s only discussion of its denial.
The IRS’s “Return Preparer Initiative” is an effort to regulate independent tax preparers such as non-CPAs, attorneys, IRS enrolled agents, and otherwise “supervised” preparers by requiring them to pass a competency test, receive continuing education, and pay annual fees. Even before this latest loss, IRS chief counsel William Wilkins admitted the initiative’s multiyear, staged rollout had “stalled” in the courts; yet he said the agency would continue—with the assistance of the Justice Department—“to contest the notion that the program lacks statutory authority.” One point deserves emphasis, Wilkins added, in recent remarks to the Tax Executives Institute:
The requirement for a paid preparer to obtain a PTIN and to include it with all prepared returns is separately authorized in Section 6109, and is not being challenged in the Loving case. The ability to associate returns with their preparers facilitates much of the activity that holds the greatest promise for improving the quality of millions of returns. Some of that activity involves IRS contacts with preparers; that will continue this season and into the future.
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