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AICPA loses legal round in IRS tax pro regulation fight

August 16, 2016

One of the things I always suggest to folks who are having tax trouble, be it with filling out a return or dealing with Internal Revenue Service questions about an already filed 1040, is to consult a tax professional.

Man seeking tax help_iStock_000002861804_XSmall

By tax professional, I mean a qualified, reputable person who's up to date on the tax laws and who will help clients comply with them in a legal way that also produces the lowest possible tax liability.

Every tax pro I know personally falls into this category. So do, based on what I've read by and digitally discussed with them over the years, a lot of the tax pros I've met online.

But all it takes is one bad tax preparer to mess things up for the good ones. There's disagreement, however, among the professional tax preparer community, Congress and the IRS about what to do about the less-than-stellar tax preparers.

Good arguments for both sides are made by a couple of those tax pros I know digitally. Robert D Flach, a professional tax preparer for 40+ years and The Wandering Tax Pro blogger, is for some regulation. Joe Kristan, a CPA and principal author of Roth & Company's Tax Update blog, is against additional regulation. (Bob and Joe, if you've changed your minds or have more recent arguments/posts about the preparer regulation effort, let me know and I'll link to them, too.)

From mandatory to voluntary: The IRS tried to institute a mandatory regulation method that included registration and continuing education requirements for tax preparers who aren't already required, by virtue of where they live (a handful of states regulate tax pros) or their professional affiliations (CPA, Enrolled Agent, attorney) that already required certain qualifications.

That effort was halted by a court challenge, Loving et al vs. IRS.

So the IRS opted for voluntary credentialing, officially known as the Annual Filing Season Program (AFSP).

Now AFSP also is facing legal challenges.

Back to court: The most notable opposition comes from the American Institute of Certified Public Accountants (AICPA), which in 2014 filed a lawsuit to stop the IRS' voluntary annual-filing-season program for unenrolled preparers. AICPA contends that IRS' voluntary tax preparer education program is simply an effort to get around the loss it suffered in the Loving case.

This time, though, the IRS is — so far — winning.

A federal district court threw out AICPA's case. An appeals court reversed that decision and reinstated the case. And on Aug. 3, the district court again sided with the IRS. 

The latest court finding is that while the AICPA showed a competitive injury, its grievance did not fall within the zone of interests protected by 31 U.S.C. section 330(a). I'll let the lawyers duke that one out.

In the meantime, though, I'd like to hear from all y'all — including Bob and Joe again — about what you think as far as tax preparer regulation.

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
  • JOHN LAINE

    Registration is not needed and likely would be an overkill when implemented by the IRS for people who mostly practice with the 1040EZ market. IRS systems should screen all returns equally regardless of the source of preparation, thus who prepared the return would not be relevant . Threatening lax preparers with massive fines (see EIC audit stats on preparer penalties) is just a way for the IRS to say it is doing its job to improve the system without doing its job to the extent it should. Taxes and forms should be simple enough for a person to do it himself/herself without 20 hours of education. Unless the IRS figures out a way to make the brother-in-law take CPE before helping sis-in law with her taxes, it should address tax system improvement from a different approach.

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