In a little known act, the Obama administration and the IRS have tried to begin regulating tax preparers by using a law from 1884 concerning dead or lost horses during the Civil War. The government is trying to use a law that allowed the government to decide who could and who could not defend a client against the government on horses taken during the Civil War.
Justice Department Tax Division lawyer Gilbert Rothenberg tried explaining the government's contention that the 1884 law could be applied to tax preparers. But there are big differences in the two cases. In the 1884 law, the government used the new law to decide who was qualified to represent a complainant. Tax preparers provide a service and never represent anyone.
The Institute for Justice, a libertarian advocacy law firm, is handling the case. They contend that since congress ndid not give the IRS regulatory powers over preparers, they cannot usurp it. The government wants all preparers to take yearly courses on tax preparation. However, once their foot is in the door, they would have practically no limit on what they could regulate or force preparers to do.
The three judges sitting in judgement were all appointed by republican presidents and they have given no indication on how they will decide the case, but in any case the decision is months off. They did question why the govenment was using an 1884 law to make a case for regulating tax preparers in 2013.
After the Civil War, people were allowed to place claims with the government on lost or dead horse. It became an industry, with agents pressing the cases, most often for a percentage of the award. That led to inflated claims. These agents were providing actual representation for their clients. The people the government found fit to represent claimants were called "enrolled agents", a term still used today.
Tax preparers do not represent a tax filer. They merely help fill out the proper tax forms and never defend the taxpayer against the government.
Last year tax preparers made out 78 million tax forms raking in a total of 9.4 billion dollars.