September 26, 2013
On Tuesday, September 24, oral arguments were heard in the Loving v. IRS case. The IRS was first to present their arguments, followed by representatives of Loving et al. The IRS finished with a rebuttal. Both sides were questioned by the judges on a variety of topics, including:
- Definition and history of the terms "representation" and "presenting a case"
- Intent of the regulations
- Whether or not paid preparers are the biggest problem of inaccurate prepared returns
- Why volunteer preparers (VITA) are not included in the regulations
- Power of Attorney requirements
The oral arguments, in its entirety, are available as recordings on the U.S. Court of Appeals for the District of Columbia Circuit website. An opinion is expected to be issued before year-end.
June 6, 2013
On June 5, the IRS filed the Reply Brief for the Appellants. The brief argues that the term “practice of representatives of persons before the Treasury Department” in §330(a)(1) is ambiguous and, even though prior IRS administrative practice chose not to apply this term to tax return preparers, it doesn't mean it cannot be applied now.
May 28, 2013
On May 24, 2013, seven tax preparers and the Tax Foundation filed an Amici Curiae in Support of Plaintiffs-Appellees. The seven tax preparers include unenrolled, enrolled agents and CPAs. The amici curia presents three arguments. The first argues against the amici curiae filed by five former Commissioners that preparing a tax return is not “presenting a case.” The document argues, “Preparing a tax return instead involves merely the presentation of conclusions regarding the various items that should be reported on the return.” The other two arguments presented are that the regulations violate the arbitrary and capricious standard and notice and comment requirements.
May 20, 2013
On May 17, 2013, the Brief of Plaintiffs – Appellees was filed with the United States Court of Appeals in the Loving case. The brief argues that Judge James E. Boasberg of the U.S. District Court for the District of Columbia correctly interpreted 31 U.S.C. § 330. The brief states: “As the district court noted, preparing a tax return is nothing like “presenting” a “case.” A tax return is informational, and does not contain advocacy or argument. It is simply a (mandatory) self-assessment of one’s tax liability that reports financial information, such as income, tax payments, and charitable contributions, as well as any relevant life events, such as a change in marital status, a change of job, or children, and shows the calculations made to determine one’s tax liability.”
In addition, the brief notes, “Both amicus curiae briefs submitted in support of the IRS rely primarily on policy arguments—such as tax code complexity or anecdotal allegations of [tax preparer] errors—which are improper for this Court to consider in evaluating an ultra vires challenge to agency regulations.”
May 16, 2013
The IRS released the following statement in regards to refunds for cancelled test appointments:
Fee amounts collected for scheduled registered tax return preparer test appointments canceled due to the court ordered injunction are being refunded. Additionally, fees collected from return preparers who tested on or after January 18, 2013, the date the test was enjoined, are also being refunded. No additional refund or reimbursement requests related to registered tax return preparer regulation are being provided or considered at this time. E-mail notifications will be provided to those receiving refunds to explain the process. No action is necessary to receive the refund. A credit for the test fee will automatically be made to the account used to pay the fee. It is anticipated that all refunds will be processed by July 19, 2013.
May 8, 2013
On April 4, 2013, the United States Court of Appeals approved the motion to expedite the Loving case. The Appellees (Sabina Loving, Elmer Kilian and John Gambino) are to file their brief by May 17 and the IRS is to file their response by May 31. The court clerk has been directed to schedule oral arguments for a date following those briefings; therefore, the case will not be heard until June. Depending on the court's calendar and its interest in expediting this case, oral arguments could be scheduled as soon as 7-10 days after briefings and a ruling issued 7-10 days thereafter. However, that would be fairly accelerated.
April 26, 2013
On April 15, 2013, Representative Cedric Richmond presented a bill to the House Ways and Means Committee, H.R. 1570, Taxpayer Protection and Preparer Fraud Prevention Act of 2013. This bill would amend title 31, to provide regulation of tax return preparers.
April 8, 2013
On Friday, April 5, two Amici Curiae briefs were filed. Amicus Curiae is a Latin term meaning “friend of the court”. Amicus Curiae briefs are filed in many Supreme Court matters, where outside parties, who are not a part of the litigation, but believe that the court’s decision will affect their interest, file a brief that provides additional information and legal arguments.
The first brief filed was from five former Commissioners of the IRS. The brief filed takes no position regarding whether the manner in which the Treasury has chosen to regulate tax return preparers is advisable, but they strongly disagree with the District Court’s view that Congress has not empowered Treasury to do so. The Commissioners argue that contrary to the District Court’s opinion, preparing and filing a tax return is indeed the presentation of a case, in which taxpayers pursue a wide variety of financial claims against the Treasury. The brief states, “Far from being a mere bookkeeper, a tax return preparer who advises and assists in preparing a tax return may be solely responsible for ‘presenting the case’ for the taxpayer’s eligibility for the benefits provided by crucial government programs administered through the tax system” intended by Congress.
The second brief filed was from the National Consumer Law Center and National Community Tax Coalition, advocates for low-income consumers and taxpayers, arguing for their interests and explaining how they have been victimized by the incompetence and abuse of paid tax preparers. The brief contains over 20 pages of reports describing interactions with unscrupulous preparers. The brief upholds the IRS’ argument that the lack of registration of tax return preparers results in fraud and abuse to individual taxpayers and the U.S. Treasury.
April 3, 2013
On Monday, April 1, the Government filed a Motion to Set Briefing Schedule and to Expedite Appeal. The brief requests that the Court expedite the appeal by assigning May 17, 2013, as the due date for appellees’ response brief and May 31, 2013, as the due date for the Government’s reply brief, and setting oral argument for the earliest available date.
April 1, 2013
On Friday, March 29, the IRS filed a Brief for the Appellants with the Court of Appeals for the D.C. Circuit. The brief argues that the District Court incorrectly interpreted the law in declaring the tax-return preparer regulations invalid and enjoining their enforcement. The brief argues that the tax-return preparer regulations are a reasonable interpretation of authority granted to the Secretary. “The District Court erred as a matter of law in holding that 31 U.S.C. § 330(a)(1) unambiguously foreclosed the Secretary of the Treasury from regulating the practice of tax-return preparers, and, accordingly, erred in declaring the tax-return preparer regulations invalid and enjoining their enforcement.”
