Paul L. Caron

Wednesday, April 29, 2020

Colella: D.C. Circuit Affirms IRS Authority To Require Practitioner Tax Id Numbers & Impose A User Fee

Frank G. Colella (Pace), D.C. Circuit Affirms IRS Authority to Require Practitioner Tax Id Numbers & Impose a User Fee: Montrois v. United States, 20 Hous. Bus. & Tax L.J. 56 (2020):

In the last five years, the D.C. Circuit has considered multiple cases regarding the scope of the Internal Revenue Service (IRS)’s power to regulate tax return preparers. In the most recent case, Montrois v. United States, the court held that the IRS has statutory authority to require tax return preparers to obtain a “practitioner tax identification number” (PTIN) as a prerequisite to the commercial preparation of tax returns. The holding also stated that the IRS could charge a user fee for the PTIN. In essence, Montrois justifies a licensing fee for a regulatory scheme that the very same court had previously held could not be implemented by the IRS.

This Article discusses why, in the wake of this trio of decisions, Congress should provide the IRS with clear, statutory guidance on the scope of authority it has delegated to the IRS over the tax return preparation industry. In light of these developments, Congress should articulate how broad, or narrow, the IRS’s authority over tax return preparers is, instead of the current patchwork of statutory and judicial guidance over the tax preparation industry.

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