In 2014, independent tax preparers emerged victorious as an appeals court ruled that the IRS did not have the authority to license them. The case was Loving v. IRS.
Here are five important facts about the case.
1. Test Requirements
The IRS sought to license tax preparers, hoping such a measure would help improve their professional standards,
according to Forbes. They created test requirements and regulation rules and fees associated with a certification process in 2011, which was dubbed a "scheme that forces tax preparers to get
IRS permission before they work," the Institute for Justice noted.
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2. Lawsuit Filed in 2012
It took two years from when the case was originally filed in 2012 for it to work its way through the courts. It was filed on behalf of three plaintiffs who were independent tax preparers, who argued that the IRS in seeking to regulate them, had exceeded its authority.
3. U.S. District Court
In 2013, a U.S. District Court agreed that they were right, noting that "Congress never gave the IRS the power to license tax preparers and the IRS cannot give itself that authority," Forbes wrote of the case.
4. Appeal
The IRS appealed the ruling but it was affirmed in 2014 by U.S. District Court Judge James E. Boasberg.
5. H&R Block Reaction
While independent tax preparers were delighted that the appeals court ruled in their favor, retail tax preparation giant H&R Block expressed disappointment, with its CEO Bill Cobb calling it an affront to taxpayers. He noted, according to Forbes: "It is outrageous that all consumers don't enjoy basic protections with such a significant financial transaction as tax preparation. Something is out of whack when you are better protected when getting your haircut than when sitting across the desk from a tax preparer. All consumers should have access to the protection that our clients receive when working with our highly trained tax professionals."
The IRS returned fees paid by those preparers it had already tested or the ones who had scheduled to test,
it noted on its website.
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