Paul L. Caron

Friday, January 24, 2014

Regulation of Paid Tax-Return Preparers and Loving

Katherine M. Hetherington (Robert Morris University), Regulation of Paid Tax-Return Preparers: A Foregone Conclusion Regardless of the Result in the Loving Case, 1 Suffolk U. Online 105 (2013):

Many have argued that the tax-return preparation industry is behind the licensing curve. The National Consumer Law Center and National Community Tax Coalition have even noted, “[m]ore regulation is required of hairdressers in many states.” The IRS sought to change this by extending its regulatory reach to tax-return preparers. However, the IRS’s right to regulate this industry is currently being litigated. In Loving v. IRS, three paid tax-return preparers, who were not previously subject to IRS regulation, sued the IRS in the United States District Court for the District of Columbia seeking injunctive and declaratory relief. After discussing the district court’s holding in Loving and the parties’ appellate arguments, this Essay analyzes the legal and policy considerations on both sides of the issue. Ultimately, this Essay concludes that the debate surrounding the IRS’s right to regulate paid tax-return preparers will end in regulation. What remains to be seen is whether a regulatory scheme will take effect through judicial blessing or legislative action. Congress has shown an appetite for legislation that would allow the IRS to regulate tax-return preparers. Thus, regardless of Loving’s outcome, tax-return preparers appear destined for regulation, like many other professions.

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