February 19, 2014
The United States Court of Appeals for the District of Columbia Circuit upheld the federal court’s 2013 ruling that the IRS does not have the authority to regulate tax return preparers under the existing IRS tax code. This means that until Congress passes legislation giving the IRS this authority, tax return preparers will not be required to pass a test and take yearly continuing education in order to prepare federal tax returns.
The court found that the IRS interpretation that Section 330 gave them the authority to require federal tax return preparers to pass a test and complete 15 hours of continuing education each year was unreasonable. Additionally, the court found that this was a unilateral attempt to expand IRS authority.
The IRS is currently reviewing the decision and should post a statement on IRS.gov in the near future about their plans regarding tax return preparer oversight.
See the DC US Court of Appeals Decision No. 13-5061 to read the complete ruling.
It is important to note that this ruling does not affect the IRS requirement that anyone who prepares or assists in the preparation of a federal tax return for compensation must obtain a PTIN and renew it each year. Failure to have a current PTIN may result in the IRS imposing a penalty on the tax preparer under Internal Revenue Code section 6695.
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2018 Expansion of Preparer Due Diligence Requirements
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