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Court rules IRS cannot impose nationwide licensing for tax preparers

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This morning the D.C. District Court of Appeals ruled the IRS does not have the right to force tax preparers to be licensed. Sabina Loving, a Chicago tax preparer, and two others have been fighting the Internal Revenue Service since the tax collecting agency started a new regulation in 2011 requiring paid tax preparers, among other things, they pass an initial certification exam, pay annual fees, and complete at least 15 hours of continuing education courses each year. The IRS estimated the new regulations will apply to between 600,000 and 700,000 tax-return preparers. The court ruled, “If we were to accept the IRS’s interpretation of [the statute], the IRS would be empowered for the first time to regulate hundreds of thousands of individuals in the multi-billion dollar tax-preparation industry. Yet nothing in the statute’s text or the legislative record contemplates that vast expansion of the IRS’s authority.”

The new 2011 regulation is said to have been instituted at the request of large scale tax preparing companies to force small, mom and pop type tax preparers out of the business. The regulation itself was drafted by H&R Block CEO Mark Ernst, exposing more crony capitalism by the Obama administration.

Dan Alban, with the Institute for Justice and the lead attorney for the plaintiffs said today, “This is a major victory for tax preparers—and taxpayers—nationwide. The court found that Congress never gave the IRS the power to license tax preparers, and the IRS cannot give itself that authority.”

Institute for Justice Senior Attorney, Scott Bullock said this morning of the IRS regulation, "These regulations were classic economic protectionism. Licensing tax preparers would have benefitted powerful industry insiders at the expense of entrepreneurs and consumers."

Loving, sounding like a hardcore libertarian, said this morning of the decision, “My customers—not the IRS—should be the ones who get to choose who prepares their taxes. I have a right to earn an honest living without getting permission from the IRS.”



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