Academic journal article Journal of Accountancy

AICPA Sues IRS to Stop Return Preparer Program: An Unenrolled Preparer Program Is an "End Run" around an Adverse Court Decision, the Institute Says

Academic journal article Journal of Accountancy

AICPA Sues IRS to Stop Return Preparer Program: An Unenrolled Preparer Program Is an "End Run" around an Adverse Court Decision, the Institute Says

Article excerpt

The AICPA filed suit in the U.S. District Court for the District of Columbia in July, asking the court to halt the IRS's recently introduced Annual Filing Season Program. The AICPA's three-count complaint asks the court to declare the rule implementing the program unlawful and stop its operation.

The Annual Filing Season Program, introduced June 30 in Rev. Proc. 2014-42, allows unenrolled tax return preparers and others to receive an annual Record of Completion from the IRS if they complete continuing education courses from IRS-approved providers (see "IRS Introduces Voluntary Certification Program for Tax Preparers," JofA, Aug. 2014, page 10). Participants must have a valid preparer tax identification number and agree to abide by the rules in subpart B and Section 10.51 of Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10). Program participants will be listed in an IRS directory of federal tax return preparers.

The AICPA's complaint is brought under the Administrative Procedure Act (APA), 5 U.S.C. Sections 551-706, and it alleges that the IRS violated the APA's notice and comment requirements when it implemented the rule through a revenue procedure. The APA requires federal government agencies to provide for notice and comment, except when issuing "interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice" (5 U.S.C. [section]553(b)). The complaint states that the revenue procedure implementing the program fits under none of these exceptions.

The AICPA also alleges that the rule is "an illegitimate exercise of government power" because it violates the APA and is "an impermissible end run" around the decision in Loving, 742 F.3d 1013 (D.C. Cir. 2014), aff'g 917 F. Supp. 2d 67 (D.D.C. 2013), which held that the IRS does not have statutory authority to regulate tax return preparers. …

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