The D.C. Circuit Court of Appeals ruled Tuesday that the IRS had no legal authority to impose a nationwide licensing scheme on tax return preparers that would have required testing and continuing education as Registered Tax Return Preparers.

The decision affirms a January 2013 ruling by U.S. District Court Judge James E. Boasberg, which struck down the IRS’s new regulations as unlawful (see Court Rules IRS Doesn’t Have the Authority to Regulate Tax Preparers. In the case, known as Loving v. IRS, both courts rejected the IRS’s claim that tax-preparer licensure was authorized by an obscure 1884 statute governing the representatives of Civil War soldiers seeking compensation for dead horses.

“This is a major victory for tax preparers—and taxpayers—nationwide”………………………..

CPA Reactions
While attorneys and CPAs would have been exempt from the proposed rules, several CPAs from the New York State Society of CPAs reacted strongly to the news of the court’s decision Tuesday.

“The potential impact is that the storefront tax preparer will thrive on the ignorant and the fraud will continue,” said Vincent Cosenza, CPA and tax manager at Shanolt, Glassman, Klein and Kramer PC in New York City.

“Much of what the IRS was looking for is already being done by most CPA firms,” said David Young, CPA, owner of Young & Company CPAs LLC in Rochester, N.Y.  “Having a strong system of quality control for tax return preparation and continuing professional education is in part what differentiates a CPA firm from H&R Block and other non-CPA firms. The taxpayer is ultimately responsible for what is on his or her income tax return.

“When choosing a tax preparer, the taxpayer should consider the possible negative ramifications of choosing an unregulated and unlicensed tax return preparer,” Young advised.  “It would be wise for the taxpayer to ask about the tax preparer’s qualifications, continuing professional education, and the firm’s quality control as it relates to tax returns.”    (read full article)