According to a report by Reuters, a U.S. judge on Friday altered his earlier ruling and said the IRS does not have to shutter its preparer regulation program, but stopped short of reinstating the agency’s ability to administer mandatory testing and fees.
Two weeks after his initial decision which annulled the regulations and enjoined the IRS from enforcing any oversight, U.S. District Judge James Boasberg made it voluntary for tax preparers to submit to IRS competency tests.
"Shutting down the program would be costly and complex, and such steps would be rendered unnecessary if the court's decision is reversed" on appeal, Boasberg said in his order.
The initial ruling on Jan. 18 threw the tax preparer community, and the IRS, into a dilemma just weeks before filing season was set to kick off. Approximately 350,000 non-professional preparers submit tax returns to the IRS every year.
In 2011, the IRS initiated a mandatory program requiring would-be preparers to register, pass a background and compliance check, and submit to continuing education in order to be recognized as a Registered Tax Return Preparer.
Former Commissioner Douglas Shulman enacted the program under IRS attempts to combat tax fraud, rising identity theft and an overall lack of regulation among paid preparers.
A libertarian advocacy group contested the IRS' authority and took legal action on behalf of three tax preparers, filing suit under Loving v. Internal Revenue Service, 12-cv-00385, U.S. District Court.
According to Reuters, an IRS spokesman did not immediately have a comment regarding Boasberg’s recent modification. The IRS had planned to appeal the judge's earlier ruling.
Boasberg said that while tax preparers do not need to take tests or pay related fees, they do need to apply for and obtain registration numbers from the IRS.
The IRS continues to have a statement on the court ruling posted on their we site.
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