Voluntary Tax Return Preparer Certification in Wake of Loving v. IRS

Voluntary Tax Return Preparer Certification in Wake of Loving v. IRS

Loving v. IRS

In February 2014, the D.C. Circuit of the U.S. Court of Appeals issued its decision in Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014), regarding the IRS’ authority to license tax return preparers.  The D.C. Circuit upheld the decision of the lower court (Loving v. IRS, 917 F. Supp. 2d 67 (D.D.C. 2013)), and affirmed that the IRS does not have the authority to issue and enforce tax return preparer regulation).  The circuit court further permanently enjoined the IRS from enforcing the regulations it had issued in 2011 (“2011 Regulations”).  In June 2014, the IRS announced a voluntary training and certification program for unenrolled tax return preparers for the 2015 filing season.  See IR 2014-75; 2014 IRB LEXIS 392 (June 26, 2014).

2011 Regulations

The IRS’ 2011 Regulations included tests, fees, and registration requirements.   The issue of tax return preparer regulations has been a hot topic for some time, though, with former IRS Commissioner Doug Shulman introducing a proposal in 2009 to require licensing and certification of tax preparers.  At the time Commissioner Shulman made the proposal, two states (California and Oregon) had already implemented similar requirements.  Interestingly, a Government Accounting Office (GAO) study showed the accuracy of returns prepared in Oregon had increased post-certification, while in California the accuracy of returns actually decreased.  See Kelly Phillips Erb, “Appellate Court to IRS:  You’ve Lost That Loving Tax Case (Again),” Forbes.com (February 2, 2014).

Voluntary Program

On June 26, 2014, the IRS announced a voluntary training and certification program for unenrolled tax return preparers for the 2015 filing season.  See David van den Berg, “IRS Announced Voluntary Preparer Certification Regime,” Tax Notes Weekly (June 30, 2014).  Preparers who complete the program will receive completion records and be included in a database of preparers.  National Taxpayer Advocate Nina Olson raised a concern about the program not requiring preparers to pass a competency test.  She urged the IRS to make a voluntary competency exam a part of the program, but recognized the IRS is doing what it can to implement a program before the 2015 filing season.

RELATED LINKS: For further discussion on the Loving v. IRS decisions, see:

  • Ann Murphy, et al., Federal Tax Practice and Procedure § 1.05 and 2.01 (Matthew Bender, Rev. Ed.)

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