Aug 17, 2018 by Roger Russell
The D.C. Circuit Court of Appeals has legitimized the Internal Revenue Service’s voluntary Annual Filing Season Program, which allows unenrolled preparers a limited right to represent taxpayers in IRS audits of tax returns. One judge on the three-judge panel concurred in part and dissented in part.
In the aftermath of the decision in the case of Loving v. IRS, in which a district court enjoined the IRS from instituting a program to regulate all tax preparers, the IRS instituted the Annual Filing Season Program in Rev. Proc. 2014-42, providing for voluntary education and testing of preparers. Although open to all categories of tax preparers, the program is designed for unenrolled preparers.
The AICPA challenged the program in district court, asserting violations of the Administrative Procedure Act. The district court initially dismissed the case for lack of constitutional standing, and the Circuit Court reversed. On remand, the district court granted the IRS motion for judgment on the pleadings, arguing again that the AICPA lacked standing.
On appeal, the D.C. Circuit Court of Appeals reversed that, finding that the AICPA did have standing to challenge the validity of the program because its members employ unenrolled preparers. However, the court, addressing the merits of the case, held that the program did not violate the APA. According to the court, the program was within the IRS’s statutory authority under 31 U.S.C. section 330(a) and Code section 7803(a)(2)(A).