The U.S. Internal Revenue Service doesn't have the authority to license hundreds of thousands of tax preparers, a federal judge ruled, throwing out a regulatory system that the agency was introducing in stages.
The licensing rules are invalid because the IRS stretched a law allowing it to regulate people who "advise and assist persons in presenting their cases" before the agency to cover tax preparers, U.S. District Judge James Boasberg in Washington wrote in a decision Friday. "Filing a tax return would never, in normal usage, be described as 'presenting a case.' "
The IRS regulations, which had been scheduled to take effect over the next several years, required preparers to pass a competency test and meet continuing education requirements.
"Congress never gave the IRS the power to license tax preparers," said Scott Bullock, senior attorney with the Institute for Justice, a nonprofit group in Arlington, Va., that brought the case. "If the IRS wants this to happen, it has to come from Congress."
Dean Patterson, an IRS spokesman, declined to comment on the ruling.
Attorneys, certified public accountants and enrolled agents were exempt from the new requirements.