Aldrich Law Firm, Ltd.
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Court overturns IRS regulations for tax preparer businesses

Owners of tax preparation businesses in Southern Nevada may be glad to hear that strict new regulations of tax preparers proposed by the IRS were shot down by a federal judge in Jan. 18. Attorneys for three tax preparers who filed the litigation against the new regulations argued that the proposed new rules unfairly targeted non-attorney or CPA preparers and exceeded the powers granted to the IRS.

The IRS announced in 2011 that it would be imposing a series of new regulations on tax preparers due to concerns that some professional preparers, many of whom work in small businesses, were not filling out clients’ tax returns properly. Under the new requirements, tax preparers who were not CPAs or attorneys would have had to pass an exam and pay an application fee. To keep their certification, they would have been required to attend 15 hours of continuing education courses each year. The regulations were set to begin in January 2014.

It is not clear from an article in the Las Vegas Sun what the judge based his ruling on. An attorney representing the plaintiffs said that the regulations fell outside the powers of the IRS. He said that the regulations would be too large a burden on small tax preparation businesses. About 60 percent of tax returns filed in the U.S. are done by a professional tax preparer.

The IRS has the right to appeal the injunction against the proposed regulations. A spokesman for the federal agency declined to comment on whether it would do so.

Source: Las Vegas Sun, “IRS loses lawsuit in fight against tax preparers,” Jan. 18, 2013

John P. Aldrich
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