About the Recent Court Ruling Against IRS Oversight of Tax Preparers


In recent years, the IRS has taken steps to put in place a monitoring process designed to ensure the expertise of tax professionals to ensure greater accuracy in the preparation of personal income tax returns. The IRS founded its authority to implement the program on a law promulgated in 1884 that allows it to regulate "representatives" who "practice" before giving them legal grounds to implement the program and circumvent the legislative process.

In introducing the new regulation for tax preparers, the stated main purpose of the IRS was to improve tax compliance by preparing unqualified tax returns and unscrupulous practitioners found to have committed some number of infractions ranging from the filing of fraudulent claims to the fraud of their customers.

However, a court recently ruled that, although the above-mentioned law gives the IRS the power to regulate lawyers, registrars, CPA's and other professionals who represent clients in "cases" before the IRS, this authority is not extended to tax preparers. Indeed, the judge found that the IRS had no legal basis for requiring tax preparers to test their proficiency and retain a tax number. 39, tax identification of the preparer in order to be able to file a federal income tax return.

The decision touched on all three aspects of the IRS tax preparer's regulatory program, namely the requirements for testing, continuing education and registration RTRP, but does not affect the tax identification number of the preparer, or PTIN, required for registration. This is because the PTIN is covered by a regulation under a separate statutory authority. However, the court's decision precludes the IRS from making the issuance of the PTIN subject to the acquisition of the RTRP credential in the first place.

The court's decision met with mixed criticism. Some industry advocates believe that the IRS should end the process of regulating tax preparers until it is able to legally enforce it. On the other hand, a considerable number of preparers support skills testing and continuing professional development as essential to establishing and / or improving the quality of returns filed by tax preparers in order to provide service. adequate and possible representation of taxpayers.

For some, the supervision of the IRS seems to be a means of arousing professional pride and they believe that the title of tax preparer registered would add prestige to the profession as a brand of someone. one who had achieved the qualification and the required standards of conduct. They support the continuation of testing, even on a voluntary basis.

For others, the professional standards provided for in the draft regulation are not serious and underline the need for surveillance and education to counter misrepresentation and flagrant fraud by unqualified tax professionals. or unscrupulous.

The IRS reacted to the Court's decision by announcing on January 22 that it was collaborating with the Department of Justice and that it was convinced that its power allowed it to administer the program. that he had established to regulate the work of tax preparers. . In the same announcement, the IRS said it was currently thinking about the best way to follow up on the court order and that it will take further action shortly.

Amid the uncertainty surrounding the final outcome of the ongoing litigation, tax preparers might have the good idea to continue to prepare as they should be tested in the near future. . If the final court decision is favorable to the plaintiffs in the case against the IRS, the study of these documents would help the tax preparers to acquire knowledge, thus making them more apt to better serve their clients. If the decision is reversed in favor of the IRS, those who have pursued their studies will be ready to test in the short term and have a good chance of passing the test and obtaining their RTRP credentials.

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