Tax Preparers Testing and Continuing Education Update

Tax Professionals' Resource
May 10, 2013 — 1,750 views  
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The online registration and renewal for PTIN (Preparer Tax Identification Number) is mandatory for all tax preparers. The online registration and renewal process for the PTIN has been reopened for the year 2013 after a lot of deliberation and legal battle between a trio of tax preparers and the Internal Revenue Service (IRS).

The IRS had imposed a regulatory rule on tax preparers, which stated that all tax preparers had to be licensed and approved by the IRS, before they were legally eligible to file returns on behalf of their clients. But a trio of tax preparers had filed a lawsuit against this regulation regime stating that the IRS has no right to impose this rule on tax preparers.

Institute of Justice Vs the IRS

John Gambino, Sabina Loving, and Elmer Kilian, a group of three taxpayers had formed a consortium and appealed against the IRS’s self-imposition of itself as a ruling and authorizing body in determining a tax preparer’s requirements. The trio was represented by a libertarian law firm from Arlington, VA, Institute of Justice. Their appeal was that the IRS had no right to impose the laws that made it mandatory to regularize existing tax preparers and authorize new tax preparers. The case gained a lot of publicity and popularity as ‘Loving vs. IRS’.

Judge Boasberg Rules in Favor of Loving

The Federal judge, James E. Boasberg, after hearing the arguments from both sides, said that the IRS did not have any authority to impose the Registered Tax Return Preparer regime. But the IRS had appealed to the judge by stating that this particular ruling could impact the 2013 tax season. Boasberg issued a clarification ruling on the 1st of February, 2013 by stating that the IRS can reopen the PTIN registration or renewal process for 2013. The judge said that tax preparers can continue training themselves, only on a voluntary basis and that would not be mandatory until the injunction was in place.

US Court of Appeals Upholds Boasberg’s Decision

After the IRS filed for an appeal in the US Court of Appeals, a three judge panel was constituted to look into the appeal petition. The panel determined that the ‘stringent requirements for a stay pending appeal’ was not met by the IRS appeal and consequently upheld Boasberg’s decision.

Tax Preparers Rights Upheld

Dan Alban, who represented the tax preparers, said that he will continue to fight against the IRS and protect the tax preparers’ right to earn a livelihood. He added that the congress had never constituted a rule that gives the IRS a power to establish itself as a ruling body. Alban also said that he was not looking into the actual merits and demerits of the IRS becoming the ultimate governing body for tax preparers.

At this point of time, it looks like the tax preparers are free to go ahead with their business without any authentication from the IRS. But it remains to see how hard the IRS will fight to have control over the tax preparers requirements.

Tax Professionals' Resource