COURT RULES ON IRS PROGRAM
September 30, 2018 - Douglas Myser
Court rules on IRS program. The Court of Appeals for the D.C. Circuit held in American Institute of Certified Public Accountants v. Internal Revenue Service that the AICPA had standing to challenge the IRS's voluntary Annual Filing Season Program. However, the court held for the IRS on the merits, allowing the Service to continue the program, which had already gone into effect while AICPA's challenge was pending. The court rules on IRS program.
Rejecting the AICPA's arguments to the contrary, the court unanimously held that the program was within the statutory authority delegated to the IRS, and held over a dissenting opinion that Revenue Procedure 2014-42, which established the Program was an interpretive rule, so the IRS did not violate the Administrative Procedure Act by failing to follow notice and comment rule making procedures in promulgating it. After so long, the court rules on IRS program. This was a good ruling allowing real tax professionals to file tax returns, not amateurs, and make sure amateurs also did not try to get into the business of Tax Resolution, completing a IRS Fresh Start Program or IRS Wage Garnishment issues.
Participants in the Program, which is open to all tax preparers but is designed for unenrolled preparers, are given a "Record of Completion" annually after they obtain a preparer tax identification number, complete certain education and testing requirements, and agree to be subject to the requirements for practicing before the IRS in Subpart B and Section 10.51 of Circular 230, Regulations Governing Practice Before the Internal Revenue Service. They are also permitted limited representation rights, meaning they can represent clients whose returns they prepared and signed before the IRS during an audit, a right that was previously unavailable to any unenrolled tax preparer. Participation in the program is voluntary.
The IRS established the Program in Rev. Proc. 2014-42, which it issued without a notice and comment period. The program was a response to the invalidation of an earlier attempt to regulate unenrolled tax return preparers, introduced in 2011, called the Registered Tax Return Preparer program. That program was challenged and ultimately determined to be invalid because the IRS lacked statutory authority to regulate unenrolled tax return preparers under 31 U.S.C. 330(b).