Former Commissioners: Preparing Tax Returns Is Representation

Post Date: 4/19/13
Last Updated: 4/19/13


Cross References
- Loving v. IRS, U.S. District Court for the District of Columbia, January 18, 2013
- Brief Amici Curiae of Former Commissioners of Internal Revenue, April 5, 2013

On January 18, 2013, U.S. District Judge James E. Boasberg ruled that the IRS lacks statutory authority to issue and enforce regulations under Circular 230 concerning Registered Tax Return Preparers (RTRPs), their requirement to pass a competency test, and their requirement to take annual continuing education (CE). The judge also permanently enjoined the IRS from enforcing these regulations on other tax return preparers.

The IRS has appealed this court decision to the United States Court of Appeals for the District of Columbia Circuit. A key issue in the U.S. District Court decision is the opinion that preparing tax returns for clients is not representation. Title 31 of the U.S. Code, Section 330, gives the IRS statutory authority to regulate the practice of representing taxpayers before the IRS. The IRS used this statutory authority to implement the regulations under Circular 230 concerning RTRPs. The Judge said filing a tax return would never, in normal usage, be described as presenting a case because at the time of filing, the taxpayer has no dispute with the IRS. There is no case to present. Thus, Section 330 cannot apply to the preparation of tax returns.

In a Brief Amici Curiae of former IRS Commissioners filed with the Appeals Court, the IRS explains why it disagrees with the District Judge’s opinion that filing tax returns is not representation before the IRS. The following are excerpts from the brief.

Summary. Tax return preparers advise and assist taxpayers in presenting their cases before the United States Treasury. The District Court equated "representation of persons" (which may be regulated by the Treasury Department under 31 U.S.C. §330) with advising and assisting in presenting a case, and amici curiae assume that position to be correct for purposes of this brief. However, the District Court erred in concluding that filing a tax return would never, in normal usage, be described as presenting a case.

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. Most significantly, Congress has decided to administer an increasingly wide variety of government assistance programs through the federal income tax system, including assistance for low-income families, health care, education, and homebuyers. In each instance, preparing and filing a tax return is the sole means by which taxpayers are able to present to Treasury their qualification for these programs and to obtain the financial assistance intended by Congress.

The IRS is able to administer tens of millions of claims for government financial assistance each year with little or no dispute only because the tax return provides such an efficient and safe mechanism for handling these cases. In this manner, the advice and assistance to taxpayers provided by tax return preparers responsible for preparing the taxpayers’ returns make them "representatives" of the taxpayers subject to potential regulation under 31 U.S.C. §330.

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