Reuters, IRS Rides 1884 'Dead Horse' Law to Defense of Tax Preparer Rules:
The Obama administration on Tuesday defended its effort to regulate the tax return preparation business for the first time in U.S. history, basing its case largely on a 19th century law dealing with horses lost or killed in the Civil War.
At an appellate court hearing on a challenge brought by libertarian lawyers challenging the administration, Justice Department Tax Division lawyer Gilbert Rothenberg said: "I hate to beat a dead horse, especially one from the Civil War era."
But he explained that the administration sees the "Horse Act of 1884" as providing ample authority for the IRS to regulate the tens of thousands of preparers who fill out millions of Americans' federal tax returns.
A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit heard the administration's argument. Rothenberg said the IRS should be allowed to force tax return preparers -- who are now unregulated -- to pass a competency test and take annual continuing education classes.
But the Institute for Justice, a libertarian advocacy law firm, disagreed. "Congress never gave the IRS authority to regulate tax preparers," said Dan Alban, an attorney for the institute.
The case has broad implications for the industry, which includes H&R Block Inc, a few mid-tier companies and thousands of tiny, mom-and-pop firms.
A decision from the judges is still months away. In oral arguments, the judges -- all appointed by Republican presidents -- gave no clear sign of how they will rule, yea or neigh. But they did question why the IRS was citing an 1884 law to justify trying to police tax return preparers in 2013.
The Foundry, D.C. Circuit Signals Doubts on IRS Tax Preparer Regulations:
In oral argument today, the D.C. federal appeals court appeared ready to throw cold water on the IRS’s claim to have the authority to regulate income tax return preparers under a 130-year-old statute. The case is just the latest to arise following President Obama’s push for the executive branch to take more and bolder actions without seeking congressional authorization. ...
If oral argument is any indication, the court will likely find that the statute simply does not give the IRS the authority to regulate the enormous class of preparers, and if the reasons for doing so were as strong as the agency claims, it should have sought authorization from Congress—just as the Constitution requires.
Tax Update Blog, Preparer Regulation Has a Bad Day in Court:
Tax Analysts reports ($link)
that the judges hearing the IRS appeal of the D.C. District Court’s
shutdown of Doug Shulman’s preparer regulation power grab do not appear
inclined to reverse it:
The D.C. Circuit during September 24 oral arguments
in Loving v. IRS, No. 13-5061 (D.C. Cir. 2013), expressed skepticism
that the IRS possesses the statutory authority to implement its tax
return preparer program. Stuart J. Bassin of Baker & Hostetler LLP
said that the oral arguments did not go well for the government and that
it didn’t appear as if the court was “buying what the government was
Prior TaxProf Blog coverage:
- IRS Issues New Tax Return Preparer Rules (Jan. 5, 2010)
- Wall Street Journal, IRS Takeover of the Tax Preparer Industry (Jan. 7, 2010)
- Court Says IRS Lacks Authority to Regulate Tax Preparers (Jan. 19, 2013)
- IRS Suspends Regulation of Tax Return Preparers After Friday's Court Defeat (Jan. 23, 2013)
- IRS to Appeal District Court Ruling Barring Regulation of Tax Return Preparers (Jan. 24, 2013)
- Nina E. Olson (National Taxpayer Advocate), More Than a 'Mere' Preparer: Loving and Return Preparation, 139 Tax Notes 767 (May 13, 2013):
- Bryan Camp (Texas Tech), 'Loving' Return Preparer Regulation, 140 Tax Notes 457 (July 29, 2013)
(Hat Tip: Mike Lang.)