Three paid tax return preparers (plaintiffs), filed a lawsuit (Loving et al., 2013-1 USTC ¶50,156) challenging the authority of the IRS to issue the new Circular 230 regulations authorizing the IRS to license paid tax return preparers who are not otherwise regulated by their respective professions.
The case was assigned to Judge James Boasberg, United States District Court for the District of Columbia, on March 13, 2012. On January 18, 2013, the judge granted the plaintiffs’ motion for declaratory and injunctive relief. The Court granted a declaratory judgment that the IRS lacked the statutory authority to “promulgate or enforce the new regulatory scheme for registered tax return preparers brought under Circular 230 by 76 Fed. Reg. 32,386.”
Further, the Court granted permanent injunctive relief as well, thus enjoining the IRS from enforcing its licensing, testing and continuing education regime for tax preparers who are not otherwise regulated.
The IRS has appealed this decision. Oral arguments were heard September 24, 2013. The oral arguments, in its entirety, are available as recordings on the U.S. Court of Appeals for the District of Columbia Circuit website. An opinion is expected to be issued before year-end.
This hearing in no way changes the current status of the RTRP program. There is still no requirement for unenrolled preparers to obtain CPE or take an exam. We will not know the outcome of this case until the judges who heard the appeal make a ruling.