Jan 18, 6:32 PM EST
IRS LOSES LAWSUIT IN FIGHT AGAINST TAX PREPARERS
BY MATTHEW BARAKAT ASSOCIATED PRESS
FALLS CHURCH, Va. (AP) -- A federal judge on Friday
barred the IRS from imposing a series of new regulations, including a
competency exam, on hundreds of thousands of tax preparers.
U.S. District Judge James Boasberg in Washington ruled
against the IRS in favor of three tax preparers who filed suit last year with
the help of a libertarian legal group, the Arlington, Va.-based Institute for
Justice.
Since 2011, in response to what it says has been a
growing problem of poorly done returns, the IRS has sought to impose a series
of new regulations on tax preparers. That included a requirement to pass a
qualifying exam, paying an annual application fee, and taking 15 hours annually
of continuing-education courses.
Attorneys and certified public accountants would have
been exempt from the regulations.
The Institute for Justice argued that the IRS lacked the
statutory authority to impose the regulations and said they would put tens of
thousands of mom-and-pop tax preparers out of business, because the regulations
were onerous and create a competitive disadvantage to the attorneys and CPAs
who were exempt.
The judge's order includes an injunction that bars
implementation of the regulations, which have been put in place on a piecemeal
basis. The competency exam was to have taken effect in 2014.
Dan Alban, an Institute for Justice attorney, said the
timing of the ruling is good because tax preparers who could have been put out
of business will be able to work during the coming tax season.
"It is also good for the public at large because the
cost of preparing a tax return was about to go up" as a result of the
increased regulations, Alban said.
Alban called the IRS plan "an unlawful power grab by
one of the most powerful federal agencies and thankfully the court stopped the
IRS dead in its tracks."
The IRS argued in court that it not only had the
statutory authority to impose the regulations, but also had the inherent
authority to do so.
An IRS spokesman declined comment Friday on the judge's
ruling.
The government can seek to appeal.
Paid tax preparers fill out 60 percent of all U.S. tax
returns, according to a study from the Government Accountability Office, a
congressional watchdog agency. The GAO has found significant problems over the
years in the quality of work done by them. In one 2006 study, the GAO took tax
returns to 19 different commercial tax preparers, and 17 of 19 incorrectly
calculated the taxes due.
© 2013 THE ASSOCIATED PRESS. ALL RIGHTS RESERVED.
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