What’s next in the world of tax preparer oversight?

The last three weeks have been eventful in the world of tax preparer supervision!

It all started last March when three tax preparers filed a lawsuit against the IRS, seeking to end testing requirements that would require tax return preparers to demonstrate proficiency and maintain proficiency by taking 15 hours of continuing education courses, in order to qualify. Continue to prepare and file tax returns for your clients.

News broke a couple of weeks ago that US District Court Judge James E. Boasberg of the DC District Court had ruled in favor of the plaintiffs, stating that contrary to the IRS’s assertions, the The agency has no legal powers to regulate individual tax preparers. . The judge ordered the IRS to continue administering tests to certify the competency of tax return preparers.

Last week it was announced that the IRS, in conjunction with the Department of Justice, had moved to lift the initial injunction, while preparing an appeal to be filed within the next 30 days.

The lead attorney for the tax preparers who brought the lawsuit against the IRS was confident that the initial decision issued by Judge Boasberg would be final and unequivocal in its intent to stop IRS regulation requiring individual tax preparers to perform a test. jurisdiction, and expressed confidence that the judge did not retract that decision.

However, on February 1, the judge responded to the IRS’s motion, along with the Department of Justice, and reversed his earlier decision. At least for now, the IRS does not have to shut down the tax preparer registration program, but on the other hand, under the amended decision, the judge made it waived for tax preparers to take the competency test. and pay the required testing fees to the IRS. Under the judge’s amended decision, preparers can take the test voluntarily and are not required to pay test fees. However, tax preparers must still apply for and obtain a registration number, or PIN, from the IRS to qualify to file tax returns.

Under the new ruling, the IRS does not have to dismantle the expensive and complex program it has already implemented at a cost of millions of dollars, as such steps would have been unnecessary if the current court decision were reversed on appeal.

The IRS has indicated that it will appeal the US District Court ruling that the agency does not have the power to license the hundreds of thousands of tax preparers who work on preparing individual tax returns, and alludes to the fact that immediate suspension of the tax preparer monitoring program would substantially disrupt the tax administration. There has already been a delay in the date to start filing individual returns, which has been moved to January 30. Some returns will not start processing until later.

In light of events in recent weeks, one thing is certain. The IRS will appeal the Court’s decision to suspend the RTRP competency tests, and the plaintiffs who filed the initial lawsuit will likely continue to try to derail the IRS’s efforts to regulate the tax preparation industry.

But judging by the opinions blogged by tax professionals who have already studied and passed the RTRP test, the monitoring program is necessary to curb potential fraud and malpractice, reduce serious errors on tax returns that end up hurting to the taxpayer. , but above all, aim to be RTRP certified as a symbol of professional pride and demonstrated competence, which will benefit the tax professional by increasing the confidence of taxpayers in the work of their tax preparer.