April 26, 2013
On April 15, 2013, Representative Cedric Richmond presented a bill to the House Ways and Means Committee, H.R. 1570, Taxpayer Protection and Preparer Fraud Prevention Act of 2013. This bill would amend title 31, to provide regulation of tax return preparers.
April 8, 2013
On Friday, April 5, two Amici Cuiae briefs were filed. Amicus Curiae is a Latin term meaning “friend of the court”. Amicus Curiae briefs are filed in many Supreme Court matters, where outside parties, who are not a part of the litigation, but believe that the court’s decision will affect their interest, file a brief that provides additional information and legal arguments.
The first brief filed was from five former Commissioners of the IRS. The brief filed takes no position regarding whether the manner in which the Treasury has chosen to regulate tax return preparers is advisable, but they strongly disagree with the District Court’s view that Congress has not empowered Treasury to do so. The Commissioners argue that contrary to the District Court’s opinion, preparing and filing a tax return is indeed the presentation of a case, in which taxpayers pursue a wide variety of financial claims against the Treasury. The brief states, “Far from being a mere bookkeeper, a tax return preparer who advises and assists in preparing a tax return may be solely responsible for ‘presenting the case’ for the taxpayer’s eligibility for the benefits provided by crucial government programs administered through the tax system” intended by Congress.
The second brief filed was from the National Consumer Law Center and National Community Tax Coalition, advocates for low-income consumers and taxpayers, arguing for their interests and explaining how they have been victimized by the incompetence and abuse of paid tax preparers. The brief contains over 20 pages of reports describing interactions with unscrupulous preparers. The brief upholds the IRS’ argument that the lack of registration of tax return preparers results in fraud and abuse to individual taxpayers and the U.S. Treasury.
April 3, 2013
On Monday, April 1, the Government filed a Motion to Set Briefing Schedule and to Expedite Appeal. The brief requests that the Court expedite the appeal by assigning May 17, 2013, as the due date for appellees’ response brief and May 31, 2013, as the due date for the Government’s reply brief, and setting oral argument for the earliest available date.
April 1, 2013
On Friday, March 29, the IRS filed a Brief for the Appellants with the Court of Appeals for the D.C. Circuit. The brief argues that the District Court incorrectly interpreted the law in declaring the tax-return preparer regulations invalid and enjoining their enforcement. The brief argues that the tax-return preparer regulations are a reasonable interpretation of authority granted to the Secretary.
“The District Court erred as a matter of law in holding that 31 U.S.C. § 330(a)(1) unambiguously foreclosed the Secretary of the Treasury from regulating the practice of tax-return preparers, and, accordingly, erred in declaring the tax-return preparer regulations invalid and enjoining their enforcement.”
March 28, 2013
On March 27, three circuit judges from the D.C. Circuit Court of Appeals denied the IRS' request for the injunction to be lifted. The ruling stated, "Appellants have not satisfied the stringent requirements for a stay pending appeal." This means that no tax return preparer may be required to test or obtain continuing education. No schedule has been issued for briefing or oral arguments.
March 15, 2013
On March 14, the IRS has filed a reply to the appellees’ response to the IRS’ original request for a Motion for a Stay Pending Appeal in the Loving case. This response rebuts the appellees argument that the IRS failed to provide evidence and support that not reinstating the return preparer program would hurt tax preparers and taxpayers. The IRS argues, “[the] plaintiffs essentially ignore the Government’s actual arguments as to its likelihood of success on appeal, and distort the very real and irreparable harm that the Government and the taxpaying public face absent a stay.”
March 11, 2013
On March 8, the Plaintiffs-Appellees (Sabina Loving, Elmer Kilian and John Gambino), filed their response to the Government's Motion for a Stay Pending Appeal. In the response, the appellees argue that, "[t]he IRS fails to provide adequate evidentiary support for most of its claims, many of which are conclusory, vague and unquantified, or exaggerated. To obtain extraordinary relief, a movant must “substantiate” its claim of irreparable injury."
February 26, 2013
On behalf of the IRS, the Department of Justice filed a Government's Motion for a Stay Pending Appeal. This motion requests that the Appellate Court reinstate the registered tax return preparer program during the appeals process. The motion argues that the stay is in the best interest of the IRS, tax preparers and most importantly, taxpayers. The motion states that “[t]he greatest harm from the injunction will come in 2014, when the regulations meant to guard taxpayers from incompetent and unethical tax-return preparers are scheduled to become fully operational. The IRS estimates that fraud, abuse, and errors cost the taxpaying public billions of dollars annually.”
The motion also includes a Declaration of Carol Campbell, which includes 21 declarations covering Campbell's background, as well as the financial harm and the harm to tax administration and public because of the Court's Order.
February 21, 2013
Yesterday, February 20, 2013, on behalf of the IRS, the Department of Justice filed a Notice of Appeal preserving the IRS’ right to appeal the recent ruling on Loving v. IRS, which challenged IRS’ authority to regulate tax preparers. As a government entity, the IRS has up to 60 days from the ruling to file its appeal. The IRS has no further comment on the ongoing litigation.
Preston Benoit, Deputy Director of the Return Preparer Office, said that due to the injunction, the IRS neither recognizes nor endorses the RTRP credential. The IRS will not comment on whether or not a professional can use the credential, but he did say there was nothing stopping professionals from displaying their certificates. Benoit also said the IRS is considering all options with regard to the RTRP testing and are trying to move forward quickly. They have not ruled out implementing voluntary testing.
February 4, 2013
On Friday, February 1, the Court filed a Memorandum Opinion and Order in which the Court refused to stay its injunction and clarified the specifics of the injunction. The Injunction was modified to make it clear that the IRS is not required to suspend its PTIN program, nor is it required to shut down all of its testing and continuing education centers; instead, they may remain, but no tax-return preparer may be required to pay testing or continuing-education fees or to complete any testing or continuing education unless and until this injunction is stayed or vacated by the Court of Appeals.
The memo clearly states that Congress specifically authorized the PTIN scheme and it does not fall within the scope of the injunction; therefore, the requirements for all tax professionals to obtain and use a PTIN may “proceed as promulgated, except that the IRS may no longer condition PTIN eligibility on being “authorized to practice”.” This means the IRS cannot dictate that a preparer must pass the RTRP exam before obtaining a PTIN; however, they can say that all those who prepare tax returns for compensation must obtain and use a PTIN.
January 18, 2013
On Friday, January 18, 2013, the United States District Court for the District of Columbia handed down a decision granting permanent injunctive relief to the plaintiffs in the Sabina Loving, et. al. v. Internal Revenue Service, et. al. case challenging the validity of the new regulatory scheme for "registered tax return preparers" brought under recent changes to Circular 230. The plaintiffs were successful in getting the Court to stop the IRS from enforcing this registration regime on tax return preparers.
Judge James E. Boasberg stated that the IRS overstepped their authority by regulating tax return preparers and that Congress never gave the IRS the authority to license tax preparers and that the IRS cannot give itself that power. This means there is no longer a requirement to take the RTRP exam or obtain continuing education.
The IRS has issued their statement that they are working with the Department of Justice and continues to have confidence in the scope of its authority to administer this program. The IRS is considering how best to address the court’s order and will take further action.
Shortly after, Director of RPO Carol Campbell held a brief conference call to reiterate the statement, as well as verified that currently the online PTIN system is down. The IRS is no longer allowing the scheduling of RTRP exams. Those who have scheduled an RTRP exam for today (January 22), are able to take the exam; however, the testing system will go down by the end of the day. This means, if you have an RTRP exam scheduled for after January 22, 2013, you will not be able to take it.
January 24, 2013
Late Wednesday, January 23, the Justice Department, on behalf of the IRS, filed a motion to suspend the injunction, pending resolution of the appeal they intend to file within 30 days.
January 29, 2013
On Tuesday, January 29, the Plaintiffs filed opposition to IRS Motion to Suspend Injunction Pending Appeal. The IRS has 2 days to respond to this opposition.
Important Documents
H.R. 1570, Taxpayer Protection and Preparer Fraud Prevention Act of 2013
Brief Amici Curiae of Former Commissioners of Internal Revenue
Brief for Amici Curiae National Consumer Law Center and National Community Tax Coalition
Motion to Set Briefing Schedule and to Expedite Appeal
Brief for the Appellants
United States Court of Appeals for the D.C. Circuit Ruling on Motion for Stay Pending Appeal
The Government’s Reply to Appellees’ Response to the Government’s Motion for a Stay Pending Appeal
Appellees' Response to Government's Motion for a Stay Pending Appeal
Government's Motion for a Stay Pending Appeal
Court's Memorandum Opinion and Order Filed on February 1
Plaintiffs File Opposition to IRS Motion to Suspend Injunction Pending Appeal
IRS Motion to Suspend Injunction Pending Appeal and Supporting Memorandum
Loving Case Order
Loving Case Opinion
As clearly stated in the Memorandum Opinion and Order filed on February 1, a PTIN is still required when preparing taxes for compensation. You must continue to renew your PTIN and use it as your file tax returns. At this time, the IRS has reopened the PTIN system for processing renewals and applications.
Do I need to get a PTIN for my supervised employees? (new 2.4.2013)
Yes. Regulations require all paid tax return preparers to register with the IRS and obtain a PTIN. A PTIN must be obtained by all tax return preparers who are compensated for preparing or assisting in the preparation of all or substantially all of any U.S. federal tax return, claim for refund or other tax form submitted to the IRS. Supervised preparers are individuals who do not sign, and are not required to sign, tax returns as a paid return preparer, but assist in preparing the return.
Can I schedule an RTRP exam date? (updated 2.21.2013)
At this time, the IRS has not made the RTRP available for voluntary testing.
I am scheduled to take the RTRP exam, can I still take the exam? (updated 1.24.2013)
As of January 23, 2013, the testing system is no longer available. This means all exam dates are cancelled.
I am scheduled to take the RTRP exam, will I get a refund? (updated 3.20.2013)
If you have scheduled to take the RTRP exam, you may either request a refund or wait to see if the IRS will reinstate the RTRP exam. If the latter happens, we expect that Prometric will contact you to reschedule the exam. Contact Prometric at 855.477.3926 for questions about refund or log onto your PTIN account to cancel your scheduled exam and complete the request for refund form. It may take the IRS up to 60 days to respond.
I recently took the RTRP exam and passed, will I receive my certificate? (updated 1.28.2013)
It has been reported that some preparers who took the exam at the beginning of January received their certificates. These could have been mailed before the court ruling.
I received my RTRP certificate, can I continue to use the RTRP designation? (updated 2.22.2013)
Preston Benoit, Deputy Director of the Return Preparer Office, said that due to the injunction, the IRS neither recognizes nor endorses the RTRP credential. The IRS will not comment on whether or not a professional can use the credential, but he did say there was nothing stopping professionals from displaying their certificates.
Do I need to get CPE for this year? (updated 2.4.2013)
You need to continue to fulfill CPE only if you are an EA, CPA or attorney or fall under other state requirements. CPE is no longer mandatory by the IRS or for IRS purposes as it pertains to RTRPs, and it is voluntary. We are still reporting CPE to the IRS.
Retrieved from: http://www.natptax.com/TAXKNOWLEDGECENTER/RTRPEXAM/Pages/RTRPCourtInjunction.aspx
On April 15, 2013, Representative Cedric Richmond presented a bill to the House Ways and Means Committee, H.R. 1570, Taxpayer Protection and Preparer Fraud Prevention Act of 2013. This bill would amend title 31, to provide regulation of tax return preparers.
April 8, 2013
On Friday, April 5, two Amici Cuiae briefs were filed. Amicus Curiae is a Latin term meaning “friend of the court”. Amicus Curiae briefs are filed in many Supreme Court matters, where outside parties, who are not a part of the litigation, but believe that the court’s decision will affect their interest, file a brief that provides additional information and legal arguments.
The first brief filed was from five former Commissioners of the IRS. The brief filed takes no position regarding whether the manner in which the Treasury has chosen to regulate tax return preparers is advisable, but they strongly disagree with the District Court’s view that Congress has not empowered Treasury to do so. The Commissioners argue that contrary to the District Court’s opinion, preparing and filing a tax return is indeed the presentation of a case, in which taxpayers pursue a wide variety of financial claims against the Treasury. The brief states, “Far from being a mere bookkeeper, a tax return preparer who advises and assists in preparing a tax return may be solely responsible for ‘presenting the case’ for the taxpayer’s eligibility for the benefits provided by crucial government programs administered through the tax system” intended by Congress.
The second brief filed was from the National Consumer Law Center and National Community Tax Coalition, advocates for low-income consumers and taxpayers, arguing for their interests and explaining how they have been victimized by the incompetence and abuse of paid tax preparers. The brief contains over 20 pages of reports describing interactions with unscrupulous preparers. The brief upholds the IRS’ argument that the lack of registration of tax return preparers results in fraud and abuse to individual taxpayers and the U.S. Treasury.
April 3, 2013
On Monday, April 1, the Government filed a Motion to Set Briefing Schedule and to Expedite Appeal. The brief requests that the Court expedite the appeal by assigning May 17, 2013, as the due date for appellees’ response brief and May 31, 2013, as the due date for the Government’s reply brief, and setting oral argument for the earliest available date.
April 1, 2013
On Friday, March 29, the IRS filed a Brief for the Appellants with the Court of Appeals for the D.C. Circuit. The brief argues that the District Court incorrectly interpreted the law in declaring the tax-return preparer regulations invalid and enjoining their enforcement. The brief argues that the tax-return preparer regulations are a reasonable interpretation of authority granted to the Secretary.
“The District Court erred as a matter of law in holding that 31 U.S.C. § 330(a)(1) unambiguously foreclosed the Secretary of the Treasury from regulating the practice of tax-return preparers, and, accordingly, erred in declaring the tax-return preparer regulations invalid and enjoining their enforcement.”
March 28, 2013
On March 27, three circuit judges from the D.C. Circuit Court of Appeals denied the IRS' request for the injunction to be lifted. The ruling stated, "Appellants have not satisfied the stringent requirements for a stay pending appeal." This means that no tax return preparer may be required to test or obtain continuing education. No schedule has been issued for briefing or oral arguments.
March 15, 2013
On March 14, the IRS has filed a reply to the appellees’ response to the IRS’ original request for a Motion for a Stay Pending Appeal in the Loving case. This response rebuts the appellees argument that the IRS failed to provide evidence and support that not reinstating the return preparer program would hurt tax preparers and taxpayers. The IRS argues, “[the] plaintiffs essentially ignore the Government’s actual arguments as to its likelihood of success on appeal, and distort the very real and irreparable harm that the Government and the taxpaying public face absent a stay.”
March 11, 2013
On March 8, the Plaintiffs-Appellees (Sabina Loving, Elmer Kilian and John Gambino), filed their response to the Government's Motion for a Stay Pending Appeal. In the response, the appellees argue that, "[t]he IRS fails to provide adequate evidentiary support for most of its claims, many of which are conclusory, vague and unquantified, or exaggerated. To obtain extraordinary relief, a movant must “substantiate” its claim of irreparable injury."
February 26, 2013
On behalf of the IRS, the Department of Justice filed a Government's Motion for a Stay Pending Appeal. This motion requests that the Appellate Court reinstate the registered tax return preparer program during the appeals process. The motion argues that the stay is in the best interest of the IRS, tax preparers and most importantly, taxpayers. The motion states that “[t]he greatest harm from the injunction will come in 2014, when the regulations meant to guard taxpayers from incompetent and unethical tax-return preparers are scheduled to become fully operational. The IRS estimates that fraud, abuse, and errors cost the taxpaying public billions of dollars annually.”
The motion also includes a Declaration of Carol Campbell, which includes 21 declarations covering Campbell's background, as well as the financial harm and the harm to tax administration and public because of the Court's Order.
February 21, 2013
Yesterday, February 20, 2013, on behalf of the IRS, the Department of Justice filed a Notice of Appeal preserving the IRS’ right to appeal the recent ruling on Loving v. IRS, which challenged IRS’ authority to regulate tax preparers. As a government entity, the IRS has up to 60 days from the ruling to file its appeal. The IRS has no further comment on the ongoing litigation.
Preston Benoit, Deputy Director of the Return Preparer Office, said that due to the injunction, the IRS neither recognizes nor endorses the RTRP credential. The IRS will not comment on whether or not a professional can use the credential, but he did say there was nothing stopping professionals from displaying their certificates. Benoit also said the IRS is considering all options with regard to the RTRP testing and are trying to move forward quickly. They have not ruled out implementing voluntary testing.
February 4, 2013
On Friday, February 1, the Court filed a Memorandum Opinion and Order in which the Court refused to stay its injunction and clarified the specifics of the injunction. The Injunction was modified to make it clear that the IRS is not required to suspend its PTIN program, nor is it required to shut down all of its testing and continuing education centers; instead, they may remain, but no tax-return preparer may be required to pay testing or continuing-education fees or to complete any testing or continuing education unless and until this injunction is stayed or vacated by the Court of Appeals.
The memo clearly states that Congress specifically authorized the PTIN scheme and it does not fall within the scope of the injunction; therefore, the requirements for all tax professionals to obtain and use a PTIN may “proceed as promulgated, except that the IRS may no longer condition PTIN eligibility on being “authorized to practice”.” This means the IRS cannot dictate that a preparer must pass the RTRP exam before obtaining a PTIN; however, they can say that all those who prepare tax returns for compensation must obtain and use a PTIN.
January 18, 2013
On Friday, January 18, 2013, the United States District Court for the District of Columbia handed down a decision granting permanent injunctive relief to the plaintiffs in the Sabina Loving, et. al. v. Internal Revenue Service, et. al. case challenging the validity of the new regulatory scheme for "registered tax return preparers" brought under recent changes to Circular 230. The plaintiffs were successful in getting the Court to stop the IRS from enforcing this registration regime on tax return preparers.
Judge James E. Boasberg stated that the IRS overstepped their authority by regulating tax return preparers and that Congress never gave the IRS the authority to license tax preparers and that the IRS cannot give itself that power. This means there is no longer a requirement to take the RTRP exam or obtain continuing education.
The IRS has issued their statement that they are working with the Department of Justice and continues to have confidence in the scope of its authority to administer this program. The IRS is considering how best to address the court’s order and will take further action.
Shortly after, Director of RPO Carol Campbell held a brief conference call to reiterate the statement, as well as verified that currently the online PTIN system is down. The IRS is no longer allowing the scheduling of RTRP exams. Those who have scheduled an RTRP exam for today (January 22), are able to take the exam; however, the testing system will go down by the end of the day. This means, if you have an RTRP exam scheduled for after January 22, 2013, you will not be able to take it.
January 24, 2013
Late Wednesday, January 23, the Justice Department, on behalf of the IRS, filed a motion to suspend the injunction, pending resolution of the appeal they intend to file within 30 days.
January 29, 2013
On Tuesday, January 29, the Plaintiffs filed opposition to IRS Motion to Suspend Injunction Pending Appeal. The IRS has 2 days to respond to this opposition.
Important Documents
H.R. 1570, Taxpayer Protection and Preparer Fraud Prevention Act of 2013
Brief Amici Curiae of Former Commissioners of Internal Revenue
Brief for Amici Curiae National Consumer Law Center and National Community Tax Coalition
Motion to Set Briefing Schedule and to Expedite Appeal
Brief for the Appellants
United States Court of Appeals for the D.C. Circuit Ruling on Motion for Stay Pending Appeal
The Government’s Reply to Appellees’ Response to the Government’s Motion for a Stay Pending Appeal
Appellees' Response to Government's Motion for a Stay Pending Appeal
Government's Motion for a Stay Pending Appeal
Court's Memorandum Opinion and Order Filed on February 1
Plaintiffs File Opposition to IRS Motion to Suspend Injunction Pending Appeal
IRS Motion to Suspend Injunction Pending Appeal and Supporting Memorandum
Loving Case Order
Loving Case Opinion
Frequently Asked Questions
Do I have to continue to renew my PTIN or get a PTIN if I prepare taxes? (updated 4.4.2013)As clearly stated in the Memorandum Opinion and Order filed on February 1, a PTIN is still required when preparing taxes for compensation. You must continue to renew your PTIN and use it as your file tax returns. At this time, the IRS has reopened the PTIN system for processing renewals and applications.
Do I need to get a PTIN for my supervised employees? (new 2.4.2013)
Yes. Regulations require all paid tax return preparers to register with the IRS and obtain a PTIN. A PTIN must be obtained by all tax return preparers who are compensated for preparing or assisting in the preparation of all or substantially all of any U.S. federal tax return, claim for refund or other tax form submitted to the IRS. Supervised preparers are individuals who do not sign, and are not required to sign, tax returns as a paid return preparer, but assist in preparing the return.
Can I schedule an RTRP exam date? (updated 2.21.2013)
At this time, the IRS has not made the RTRP available for voluntary testing.
I am scheduled to take the RTRP exam, can I still take the exam? (updated 1.24.2013)
As of January 23, 2013, the testing system is no longer available. This means all exam dates are cancelled.
I am scheduled to take the RTRP exam, will I get a refund? (updated 3.20.2013)
If you have scheduled to take the RTRP exam, you may either request a refund or wait to see if the IRS will reinstate the RTRP exam. If the latter happens, we expect that Prometric will contact you to reschedule the exam. Contact Prometric at 855.477.3926 for questions about refund or log onto your PTIN account to cancel your scheduled exam and complete the request for refund form. It may take the IRS up to 60 days to respond.
I recently took the RTRP exam and passed, will I receive my certificate? (updated 1.28.2013)
It has been reported that some preparers who took the exam at the beginning of January received their certificates. These could have been mailed before the court ruling.
I received my RTRP certificate, can I continue to use the RTRP designation? (updated 2.22.2013)
Preston Benoit, Deputy Director of the Return Preparer Office, said that due to the injunction, the IRS neither recognizes nor endorses the RTRP credential. The IRS will not comment on whether or not a professional can use the credential, but he did say there was nothing stopping professionals from displaying their certificates.
Do I need to get CPE for this year? (updated 2.4.2013)
You need to continue to fulfill CPE only if you are an EA, CPA or attorney or fall under other state requirements. CPE is no longer mandatory by the IRS or for IRS purposes as it pertains to RTRPs, and it is voluntary. We are still reporting CPE to the IRS.
Retrieved from: http://www.natptax.com/TAXKNOWLEDGECENTER/RTRPEXAM/Pages/RTRPCourtInjunction.aspx
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
