Independent Tax Preparers Defeat IRS Licensing Requirement

Arlington, Va.—A federal court today just struck down the IRS’s new licensing rules.
In 2011, the IRS imposed an unlawful licensing scheme that benefits powerful industry insiders and harms hundreds of thousands of tax preparers across the country and the tens of millions of taxpayers who rely on them to prepare their taxes.

Three independent tax preparers—Sabina Loving of Chicago, John Gambino of Hoboken, N.J., and Elmer Kilian of Eagle, Wisc.—joined forces with the Institute for Justice in filing suit against the IRS in the U.S. District Court for the District of Columbia.

Late today, U.S. District Court Judge James E. Boasberg ruled against the IRS and in favor of the tax preparers. The opinion is available online

“Today’s ruling is a victory for hundreds of thousands of tax preparers across the country and the tens of millions of taxpayers who rely on them to prepare their taxes,” said Attorney Dan Alban of the Institute for Justice, the nation’s leading legal advocate for the rights of entrepreneurs. “This was an unlawful power grab by one of the most powerful federal agencies and thankfully the court stopped the IRS dead in its tracks. The court ruled today that Congress never gave the IRS the authority to license tax preparers, and the IRS can’t give itself that power.”

The court enjoined the IRS from enforcing its new licensing scheme for tax preparers, which was poised to put tens of thousands of tax preparers out of business.

“Through these regulations, the IRS set itself up as king and sought to license hundreds of thousands of tax preparers without being authorized to so do under the law,” said IJ Senior Attorney Scott Bullock. “But as Judge Boasberg noted, under our system of law, ‘statutory text is king.’”

Judge Boasberg further recognized that the IRS recently did a “flip-flop” with regard to its ability to license tax preparers, declaring for years it did not have the authority to do so but only recently claiming that it did have that power.

The IRS can appeal this ruling to the U.S. Court of Appeals for the District of Columbia Circuit.

The Institute for Justice is the nation’s law firm for liberty. For over 20 years IJ has been a leading legal advocate for the rights of entrepreneurs. On Tuesday morning IJ will issue a formal news release.

IRS Lawsuit case page: http://ij.org/irs-tax-preparers
One-stop-shopping backgrounder on lawsuit: http://www.ij.org/irs-tax-preparers-backgrounder-2

Dan Alban contact info: dalban@ij.org, 703-969-5899
Scott Bullock contact info: sbullock@ij.org, 202-841-6757