This round goes to the American Institute of Certified Public Accountants (AICPA).
As part of the ongoing battle between the AICPA and the IRS over the right to impose continuing education (CE) and other requirements on tax return preparers, an appellate court in our nation’s capital has overturned the district court’s decision allowing the IRS to establish a voluntary regulatory program. Now the IRS has to decide if it wants to counter-punch.
The IRS had launched the program, called the Annual Filing Season Program (AFSP), after it was defeated in a landmark case prohibiting it from regulating and testing unlicensed tax return preparers (Loving, Dist. Ct.-DC, No. 13-5061, 2/14/14). Undeterred, the agency established the AFSP. In return for registering with the IRS, taking 18 hours of CE annually and passing a comprehensive test, the IRS will certify tax return preparers who choose to participate and list them on its website. Enrolled agents (EAs), tax attorneys and CPAs are exempt, just like they were under the initial program.
However, as it did after the prior program was initiated, the AICPA protested both publicly and privately in a strongly-worded letter sent to IRS Commissioner John Koskinen. It voiced concerns that the program would create legal complications, impede the IRS’ goals and ultimately lead to confusion among taxpayers. It also argued that the IRS doesn’t have the statutory authority to proceed with the program.
Eventually, the AICPA filed suit against the IRS, alleging that the AFSP was merely an “end run” around the Loving ruling.
The judge presiding over the case in the AICPA case in the district court, Judge James A. Boasberg, dismissed the lawsuit brought against the IRS due to a lack of standing (i.e., it doesn’t have sufficient legal connection to the issue). Coincidentally, Boasberg wrote the opinion knocking out the regulation of tax return preparers in in the Loving case. But the AICPA refused to throw in the towel. It promptly appealed to the higher court and this time it prevailed.
In reversing the lower court’s ruling, the Court of Appeals for the District of Columbia determined that the AICPA has shown that the program will subject its members to an actual or imminent increase in competition and therefore has legal standing to challenge it. It reiterated what the AICPA has said, “ “because the Rule distorts the competitive marketplace and dilutes [Institute] members’ credentials by introducing a government-backed credential and government-sponsored public listing, it harms those members regardless of whether it also confuses consumers,” concluded the Court.
Based on the latest ruling, the case will proceed. We will continue to monitor developments.
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
