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.
Court Says IRS Lacks Authority to Regulate Tax Preparers bit.ly/13RV3v3 Love it! It is about time these guys over reach is reigned in!
— Marvin Van Horn (@FATCA_Fallout) January 20, 2013
I believe that the discussion on this is missing the most important point which is captured in this exchange:
My comment on “IRS Stopped ‘Dead In Its Tracks’ In Efforts To Regulate Tax Preparers” @forbes: onforb.es/Uc9xlA
— Alvin S. Brown, Esq. (@USTaxAttorney) January 20, 2013
@ustaxattorney @forbes Big difference between the regulation of preparers and preparers being regulated by the IRS. Latter is the problem!
— U.S. Citizen Abroad (@USCitizenAbroad) January 20, 2013
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.
One of the great things about no longer being a US citizen is that I no longer have to suffer this kind of abuse from the United States federal government. I prepared my last two return with the help of TaxAct. Afterwards, a prominent former litigator for the IRS told me I was nuts and that I should go ahead and pay someone to figure it out correctly. Yet I begrudge the postage stamp for send a return to the IRS.
Now I just have to pay to get my Canadian taxes done. That’s enough evil for one year and as much stress as I can handle.
My advice: Relinquish US citizenship before they make it harder.
For the discussion that was missing, here is your original post on this Regulation 🙂
You know, this is a BIG issue for Tax preparation community in America and really stirs passions amongst the compliance Complex that we should pay attention to.
Only two comments here says to me that many here do not understand the significance of this ruling, any more than we complain that Homelanders do not understand FATCA 🙂
On Accounting Today, I have NEVER EVER seen as many comments as this one story has created. Have a read.
Interesting one to watch.
Remember, it is the complexity of the Tax system, and the incompetence of the preparation community in its ability to deal with it, combined with the BIG Four Accounting Firms, the FATCA Compliance Complex that have an vested interest in the regulations that IRS created that have been struck down.
In a small way, we should be celebrating this victory for the small guy against the IRS Compliance Complex that creates the complexity for you and I.
*More on Paul Caron’s Tax Prof Blog below:
http://taxprof.typepad.com/taxprof_blog/2013/01/irs-suspends.html
You are right. This is a very big deal.
I agree with some of the comments that say that it’s up to the tax payer to choose a licenced preparer if they need to. And certification justifies higher fees for some.
But if tax preparers would have done their jobs correctly, many immigrants would not have found themselves in non-compliance because they would have been asked about their foreign bank accounts and advised to file FBAR.
And could this decision backfire in court against taxpayers, making them even more willful blind in case of mistakes for not have chosen a certified tax preparer?
Here’s a thought … throw out the 72,000 page, 4 million word US tax code. Rewrite it in plain language with a limit of say 500 pages (I’m thinking for individuals not corporations here) and then it would be possible for almost everyone to do their taxes without a tax preparer. I made a comment on another thread regarding this ruling. I mentioned how mom & pop tax prep ops provided a much needed service right now to people who cannot do their own taxes (complexity, language barrier, location, no computer access, etc.) and cannot afford to pay tip-top totally certified tax preparers. These small operations probably use computer tax programs and do not make much profit from their clients. It is the IRS employees who are paid to answer questions who need to bring their tax knowledge up to the highest level with extensive, repeated testing. The IRS wrote it, broke it and it’s up to the IRS to provide accurate answers until they fix it.
http://news.yahoo.com/us-tax-code-longer-bible-without-good-news-191208508–finance.html
@Tim
Just shows what a small guy with a determined attorney and effort can do. And, of course, the Compliance Complex is disappointed and was in favor of the regulation. Their vested interest is in competition eliminating regulation. For this moment they have been beaten back. Yes, I am glad someone else sees this as the BIG deal I do.
Wished there was some way or someone to take on the IRS regulations in a law suit against DATCA lite, Bulletin 2012-20 It is certainly in dispute that they have this regulatory power to do this, so where are the friggin’ banks that oppose it or even the Congressman? What a feeble lot they are! Ideally, it should be some of the smaller ones to take it on, as the BIG guys probably see it as another way to cement their TBTF franchise further when compliance costs force out the smaller to midsize competition.
Maybe we should be contacting this attorney
IRS to Appeal Ruling Barring Licensing of Tax Preparers
But of course. Need to protect the professional Tax Prep Complex from competition.
A number of folks thought that the new scheme stunk. Chief among them was long-time preparer and tax blogger, Bob Flach. Flach, who noted that he had never been flagged for a bad return, isn’t a CPA, an attorney or an EA. He has been incredibly vocal about the new rules, telling me (perhaps one of my favorite quotes from an interview on the blog ever):
Also this and this…
IRS asks judge to let tax preparer regulation proceed
UPDATE 2-U.S. IRS: Let new tax return preparer rules proceed
This is a story about Nina Olson that just read tonight at Forbes…
As IRS Tax Filing Season Begins, Bad News For Honest Taxpayers
I did make a comment, as I do disagree with Nina on the Tax Preparer regulation.
IRS Files Motion To Force Preparers Back Into Compliance, Cites Guess Who? @taxgirl http://onforb.es/10TywhR
Tax Preparers Contest IRS Legal Maneuver
We should be paying attention and rooting for these guys..
The saga continues for those of you who have an interest..
Congressman Wants IRS to Explain Contradictory Tax Preparer Regulation Guidance
It brings me pleasure to see Shulman’s initiatives being beaten back again… So, continuing the saga…IRS Loses Big In Court (Again), Tax Season Chugs Along
https://www.ij.org/
http://en.wikipedia.org/wiki/Institute_for_Justice
An idea?
The IGAs is not authorized by HR 2847
@Mark Twain…
I agree that the IGA was not spoken to in the Hire Act, and so there ‘may be’ a legal challenge that can be made against their actions, although we know they think that this is just a Competent Authority agreement to implement the intent of Congress.
Of course they are proceeding with the Final FATCA Fatwa unabated so they are not shirking from the Legislation as written. This CA agreement is just held out as a way around some of the country legal barriers with a little reciprocity thrown in to entice.
It would be nice if we could get some attorney to really look into whether or not there is legal justification or authority to do this.
To a separate issue….
Then there is H.R. 4078 which was a vote against IRS bulletin 2012-20
Again, I wished there was some attorney, ala Dan Alban, or some group, ala Institute for Justice willing to look into whether or not the IRS exceeded its regulatory powers. They of course claim they have not, and laid out their reasoning in the bulletin…
Is this really true, as they claim? I am not the attorney, so don’t know.
Beating the H&R Tax Blockers. And the Horse the IRS Rode In On:
@Just Me : Even Eisenhower warned of the military-industrial-complex that was developping during his presidency. What about the IRS-compliance-industry complex. Great, create more jobs for greedy experts without creating real sustainable wealth for society.
The difference between wishing and doing is either writing or calling Institute of Justice. Same as Saturday night—-the worst that can happen is that they say no
Tax Preparer Who Won IRS Case Expects Good Odds on Appeal
JournalofAccountancy @AICPA_JofA
#IRS appeals decision striking down #tax return preparer registration program — Read more:
http://ow.ly/i2M4d
The Internal Revenue Service has filed notices with a federal district court and appeals court of its intention to appeal a judge’s ruling that struck down the mandatory testing and continuing education requirements of its Registered Tax Return Preparer regime and asked the court to suspend the January ruling that invalidated the RTRP regime
https://twitter.com/FATCA_Fallout/status/307555975336976384
Just continuing to follow this story…
This in Accounting Today..
Senators Lay out Tax Reform Options and Consider Re-imposing Tax Preparer Regulation
Am I the only one following this important story…?? LOL
Victory how sweet it is for @Frimp13 Appeals Court Refuses to Lift Injunction against IRS Tax Preparer Regulation http://bit.ly/16040kl
This warms my heart to see the IRS beat. If Congress wants to pass legislation to regulate tax prepares, then let them pass them. The IRS has again over stepped its bounds and Dan Alban has made the case and the Court Agrees. End of argument!
If you don’t reign them in with legal action, they take power onto themselves, as we have seen with their IRS Bulletin 2012-20 http://1.usa.gov/11sGZsl and the FATCA IGA regime of dubious legal pedigree. http://bit.ly/WZKphF They will assert anything so as not to be constrained by the will of Congress.
You can argue endless whether or not regulation of tax prepares is good or bad. WHAT is BAD is that our tax complexity of Congressional making is so outrageous that makes “bean counters” think their profession should be regulated because the tax payer is too ignorant to choose a professional who understands it.
In America we seem to believe that the consumer is incapable of basic “buyer beware” behavior anymore, and so our business needs regulation. Or is it really that we want a closed club to protect us against competition? Endless arguments here, so won’t belabor it.
Bottom line, Dan and the Loving lawsuit is correct, and the IRS is WRONG, no matter the merits of regulation. The court has agreed, they do NOT have the power to unilateral do what they want, and for that we should all cheer!