‘Further Action’
“The Internal Revenue Service, working with the Department of Justice, continues to have confidence in the scope of its authority to administer this program,” the agency said in a statement on its website after the judge's ruling. “It is considering how best to address the court’s order and will take further action shortly.”
Representative Charles Boustany of Louisiana, chairman of a subcommittee that oversees the IRS, said he’ll ask the IRS about its certainty that the program was legal and about whether tax preparers will get their fees refunded.
Boustany, a Republican, said the return-preparer program had “some merit,” though it would be premature to discuss whether Congress would provide authority if the court ruling stands.
Imposing Standards
The rules were designed to impose standards on hundreds of thousands of return preparers who aren’t certified public accountants, attorneys or enrolled agents already licensed to practice before the IRS. The idea, promoted by former Commissioner Douglas Shulman, was to require minimum qualifications and help the agency combat tax fraud.
“What’s sad is a lot of taxpayer money has been spent on this thing and it was done without statutory bases,” said Allen Buckley, an Atlanta attorney who helped the plaintiffs with their briefs. “Fortunately, justice was done here and our system worked.”
Olson said she will advise taxpayers to ask “vigorous questions” of their return preparers about their qualifications. Low-income households are particularly vulnerable to incompetent or unscrupulous tax preparers who offer the promise of large refunds, she said.
Improving Compliance
Supporters of IRS regulation of return preparers include Robert Kerr, senior director for government relations at the National Association of Enrolled Agents. He said the agency, which audits about 1 percent of individual returns, could improve compliance with tax laws through such regulation.