Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 36 Comments

As you know the IRS wants to require a license, issued by the IRS, in order to charge money to prepare tax returns. For the moment this requirement has been struck down by the courts.

 

I believe that the discussion on this is missing the most important point which is captured in this exchange:

 

 

 

The problem is that that if it is the IRS that is issuing the license, then tax preparers will think that they must please the IRS instead of being fair to the client. It is like the problem of the lawyer who wants to put everybody into OVDP and the lawyer who considers a number of compliance options.

This case is likely to go to the Supreme Court. I suspect that the decision that the IRS can’t regulate will stand.

 

 

36 thoughts on “IRS should NOT be able to license tax preparers”

  1. this from Patric Hale…

    Another example of the timeless wisdom of our Founding Fathers, establishing the court system as a co-equal branch.

    We’ve particularly seen over especially the past 4 years (no names…) how this administration has continued to grab power by regulatory fiat without the necessary backing of legislative permission. The 2,200 “Affordable Care Act”, for instance, has already turned into over 13,000 pages of regulations – and counting!

    This is on top of a President deciding for himself with neither court or Congressional oversight which person, American or non-American, he wants to kill in a drone strike.

    Moving forward, beware of any legislation that is slipped into omnibus laws of significant value to an undeniable majority of members of Congress where the final clause states, “details to be determined by regulators.”

    Finally, the obvious: If the Tax Code were not so complicated, made so not just by legislation but the IRS itself – nothing in the FATCA law speaks to the actually complications caused by subsequent legislation – the entire issue of testing or authorizing, etc. would be moot! Consider this: People only turn to a tax-preparer if they can’t do it themselves! Let the IRS determine who they want to deal with and watch the Tax Code get even more complicated and the tax preparers more compliant and less willing to challenge the IRS, too.

    This used to be called tyranny by our Founding Fathers. What happened?

  2. After the Tparty scandal, maybe others are filling beginning to understand the regulatory over reach of the IRS…

    Sue the bastards, and they did, and continue to win! This is my favorite story of the year… I am surprise more Brockers aren’t interested, following it, or commenting.

    More Tax Preparers File Brief in Support of Lawsuit against IRS

    A group of tax practitioners, including CPAs and Enrolled Agents, along with a former IRS agent and the nonprofit Tax Foundation, have filed an amicus brief in support of a trio of tax preparers who successfully filed suit against the Internal Revenue Service to stop its program for mandatory testing and continuing education of Registered Tax Return Preparers.

    The brief, which was filed Friday, includes a number of new arguments that have not been previously advanced in prior filings, according to Dan Alban, lead attorney on the case at the Institute for Justice, a libertarian law firm in Arlington, Va., which represented the tax preparers in their suit against the IRS.

    “It pretty thoroughly demonstrates the myriad ways in which the IRS disregarded the requirements of the Administrative Procedure Act (APA) and other federal statutes in passing the RTRP regulations,” said Alban.

    The brief argues that the IRS violated the APA’s arbitrary and capricious standard in issuing the regulations, for example, by engaging in a flawed cost/benefit analysis under Executive Order 12866 in rejecting alternative approaches. “The IRS ignored the increased costs to consumers of tax-return preparation services in making this analysis,” said the brief.

  3. It is very clear that the IRS should not be able to exercise control over those who represent taxpayers. This control is part of the reason so many people were walked into OVDI.

  4. Just Me, although I haven’t commented on this issue, I follow it because you have been prescient before – as in warning us, and coining ‘GATCA’. If the IRS licenses the preparers then they will own those who are licensed.

    I’m surprised that they haven’t said that the only preparers that can prepare US returns must be IRS agents. I am not certain how much effective distance there really is between IRS Enrolled agents and the IRS already.

    And @USCitizenAbroad, you’re right. I believe that we would all have been better off, and received better advice if some (most?) of our professional advisors weren’t primarily concerned with covering their own backsides, and their own metaphysical identities as ‘Americans’ rather than helping us achieve the best possible outcome in this fiasco.

    Some of them – even those currently resident here in Canada are still obviously US homelanders in psyche – no matter that they have set up shop in Canada. Some of those prominent in practice here in Canada – and those they supervise, obviously intend to return to the US, and thus give Canadian citizen and resident ‘US taxable persons’ advice as if our theoretical access – and that of our children, to the US is a sacred ‘gift’ and goal higher in importance than that of our family’s wellbeing and financial security in Canada. If as a client, you state that your end goal is compliance in order to renounce US citizenship and end this nightmare, and that is met with a dead silence, or they try to dissuade you, then you know you have the wrong advisor. I find that particularly ironic after the fact, given the recent marketing efforts I’ve seen from professional US tax law services to those in Canada – extending even to the offer to actually physically accompany the client to the consulate for the renunciation. I guess monetary self interest finally outweighed the previous impetus to preserve US citizenship over all other considerations.

    If the practitioner also tries to persuade you that your Canadian-born child/ren would be better off being registered with the US years after the fact, for some future hypothetical access to the US – as if the streets were paved with gold – then you know you have the wrong advisor. Especially when the child’s qualification for US status is legitimately in doubt and in fact, and their professional advice defaults to assuming that they might possibly qualify – thus magically turning the child into a US taxable person, their RESP into a US taxable ‘foreign trust’ – and creating an additional source of current AND future years of FBAR and 3520/A jeopardy – for the parent as well as for the child. If that US tax law professional chooses then to press the client into accepting (without strict adherence to current US law) that additional very real and present threat – as more desirable in exchange for some nebulous fantasyland of future ‘opportunities’ in the US, then you can tell that they do not have the best interest of yourself or your child/ren at heart. Either that, or they just want the additional compliance fees for yet another family member – given the juicy prospect of the professional hours that would be generated for fending off the FBAR and 3520/A penalites.

    And, having experienced (and luckily caught by my own layperson’s diligence) an FBAR and other crucial documents prepared at great cost, with numerical and information data incorrectly entered, US residence entered incorrectly instead of Canada, and other highly damaging, potentially catastrophic and entirely obvious errors, that were signed off on by a US enrolled agent and vetted by layers of so-called US tax professionals here in Canada, I highly doubt that just having them licensed by the IRS will prevent unprofessional end products generated by greedy firms that undertake to process more clients than they can effectively handle. And if they generate additional billings in clearing up the messes they contributed to making, so much the better from their point of view. No amount of IRS licensing will stop that from happening.

  5. @Badger…
    Re “No amount of IRS licensing will stop that from happening.”

    Amen to that! Well stated post.

  6. Pingback: The Isaac Brock Society


  7. Trial Date Set for IRS Appeal of Tax Preparer Lawsuit

    A federal appeals court in Washington, D.C., has scheduled oral arguments for September 24 to hear the Internal Revenue Service’s appeal of Loving v. IRS, the case in which a trio of independent tax preparers successfully sued the IRS to suspend its mandatory testing and continuing education requirements for tax preparers.

    Three preparers—Sabina Loving of Chicago, John Gambino of Hoboken, N.J., and Elmer Kilian of Eagle, Wis.—won a victory against the IRS in January when U.S. District Court Judge James E. Boasberg ruled in their favor and found the IRS had exceeded its statutory authority in imposing its Registered Tax Return Preparer requirements (see Court Rules IRS Doesn’t Have the Authority to Regulate Tax Preparers).

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