Unfortunate Ruling as Appeals Court Upholds Decision to Overturn IRS Paid Preparer Regs

This post was written by Holden Weisman, Senior Policy Analyst at the National Community Tax Coalition, and first appeared on their “Work Forward” blog. We are cross-posting with his permission.

In a disappointing but not wholly unexpected decision, the U.S. Court of Appeals for the DC Circuit upheld the District Court’s ruling in Loving v. IRS that bars the IRS from fully implementing its paid preparer regulations. While this does not do away with requirements to obtain a PTIN for commercial tax preparers, it does continue to prevent testing and continuing education requirements from taking effect for the thousands of tax preparers who would have been regulated as Registered Tax Return Preparers. This also means it’s time to take the fight for a well-regulated tax preparation field down other avenues.

On the federal level, NCTC supports the Taxpayer Protection and Preparer Fraud Prevention Act (H.R. 1570) introduced by Rep. Cedric Richmond of Louisiana, and we encourage our members to contact their Representatives’ offices to cosponsor this bill. The bill would official grant the Treasury, through the IRS, the ability to regulate and discipline tax return preparers – paving the way to fully implement the Registered Tax Return Preparer rules, which were the subject of the Loving case. Officially codifying the authority to regulate commercial tax preparers other than CPAs, enrolled agents, and attorneys – groups with their own testing and certification requirements – is essential to ensure all taxpayers receive high-quality services from well-trained practitioners while also reducing risks of preparer fraud.

Though having strong regulations on the books at the federal level would be ideal, we certainly shouldn’t put all of our policy eggs in one basket for achieving these very important ends. Pursuing regulations on the state level is another tactic for which we’re grateful our partner in this effort, the National Consumer Law Center (NCLC), has produced the best tools for the fight. Introduced in their recent report on errors and fraud in the commercial tax preparation industry, NCLC produced a model state legislation for regulating commercial tax preparers states could use to pass their own regulations. This legislation was modeled off of already successful laws passed in Maryland, Oregon, and California, all of which were passed with the strong support of the Community VITA field. NCTC believes it’s equally as important to protect consumers at the state level as it is at the federal. We are looking to work closely with NCLC and our members to make these state-level regulations a priority across the country.

If you would like to learn more about partnering with NCTC on any of these efforts, please send an email to Holden Weisman, Senior Policy Analyst, at hweisman@tax-coalition.org.