FI L ED U.S. COURT OF APPEAL S EL EVENTHCI RCUI T J UNE 7, 2012 J OHN L EY CL ERK [ PUBLISH] IN THE UN ITED STATES COURT OF APPEALS FOR THE ELE VENTH CIRCUIT

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__ __ __ __ __ __ __ __ __ __ __ __ D. C. Dock etNo. 4 :1 1- cv -0 01 35 -HLM JESS E E. BRANNEN, III, P.C., JESS E E. BRANNEN, III, etal., Pl ai nt iff s- App el lant s, ve rs us UNITED STAT ES OF AMERIC A, Defen da nt -Ap pe ll ee.

__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co urt fo r th e North ernDis tri ctof Ge or gi a

__ __ __ __ __ __ __ __ __ __ __ __ _ (J un e 7 , 20 12 ) Befo re WILSON, ANDERSON andHIGGINBOTHAM, Cir cu itJu dg es . * ANDERSON, Circ ui t J ud ge : Je ss e Brann en , III, P.C., an d J es se Bran ne n, II I, (co ll ect iv el y “ Bran ne n” ),
Honora ble Patrick E. Hig g inbotham, United States Circuit J udg e for the Fif th Circuit, * sitti ngby designation.ap pe al th e d is m is sa l o f th ei r co m pl ai ntco nt en di ng th atth e Dep art m en t o f th e Treas ury lac ke d s ta tu to ry

au th or it y to pro m ul ga te reg ul at io ns im

po si ng a us er fe e. Sp eci fic al ly, Bran ne n c ha ll en ge d t he Depa rtment’s re gu la ti on ’s requi rem en t t ha t
co m pe ns at edtax return p rep arer s o bt ai n aPrep arerTax Id en ti fic at io n Nu m be r (“ PTIN”) an d i ts im

po si ti on of a n a nn ua l fe e fo r th atnu m be r. I. FACTS AND PROCEDURAL BACKGROUND Je ss e Brann enis anatt orne y an d c ert ifi edpubl ic acco un ta ntin Geor gi a who pr ep ares tax returns an d re fu ndcla im s fo r ot he rs for co m pe ns at io n. In20 10 , in
acco rd an ce wi th th e n ew Treas ury reg ul at io n, Br an ne n fi le d fo r an d p ai d $ 64 .25 to
rece iv e a PTIN. He th enfil edfora refu ndwit h t he IRS, b utitwas re jecte d. Bran ne n t he n fi le d t hi s l aws ui t as a pu rp orte d c la ss act io n. Br an ne n’s
co m pl ai ntass ert edth atth e Dep art m en t’s i m pl em en ta ti on of t he fee ex ceed edit s st atut ory au th or iz at io n. Br an ne n a rg ue s t ha t, wh il e 2 6 U.S.C. § 61 09 au th or iz es th e is su an ce o f an id en ti fy in g n um be r, itdo es no t au th or iz e a fee . The Go ve rn m en t
m ov edfordi sm is sa l o f th e co m pl ai nt , andth e co urt b el ow g ran te d i ts m ot io n, ho ld in g t ha t Br an ne n fa il edto setforth a vi ab le cla im
. II. DISCUS SION Bran ne n’s s ol e arg um en t i s t ha t t he Depa rtment o f th e Treas ury ex ceed edit s st atut ory au th or it y when itbe ga n c ha rg in g fe es foris su in g a ndren ewin g P TINs.
2He co nt en ds th atno st atut e en act edby Con gr es s h as pro vi de d t he Department wi th

th atpo wer. Acco rd in g t o B ran ne n, 2 6 U.S.C. § 61 09 pro vi de s fo r PTINs to he lp th e Dep art m en t i de nt ify tax pa y ers an d t ax return p rep arer s, an d t hu s h el ps th e Dep artm en t i n i ts tax co ll ect io n e ffo rts . He in si st s t ha t m erel y is su in g aPTIN to a ta x re tu rnpre pa rer i s n oten ou gh to jus ti fy ch arg in g aus er fe e. Und er the Ind ep en de ntOffic es Aut ho rit ie s Act , 31 U.S.C. § 9 70 1, ag en ci es are p erm it te d t o p ro m

ul ga te reg ul at io ns th atest ab li sh a ch arg e fo r a s erv ic e o r th in g of va lu e th atth e ag en cy

pro vi de s. Th os e ch arg es are re qu ire d t o b e: (1 ) fai r; a nd (2 ) ba se d o n- - (A) th e co st s t o t he Gov ern m en t; (B) t he va lu e o f th e se rv ic e o r th in g t o t he reci pi en t; (C) p ub li c p ol ic y

or i nt eres t s erv ed ; an d (D) o th er re le va ntfact s. 31 U.S.C. § 9 70 1( b) . Int erp ret in g t hi s s ta tu te ’s pre de ces so r, th e Supr em e Co urt i n Nati on al Cab le Tele vi si on Ass ’n, Inc . v. Un it edSta te s, 4 15 U.S. 33 6, 9 4 S . Ct. 11 46 (19 74 ), cl ari fie d t ha t t he Act p erm it te d a ge nc ie s t o l ev y fees ba se d o n se rv ic es ren de redbu t n otlev y tax es , whi chis th e ex cl us iv e d om ai n o f th e le gi sl atur e. Elab or at in g o n thi s h ol di ng , th e Co urt i n F ed eral Po wer Co m m is si on v. New Eng la ndPo wer Co ., 41 5 U.S. 3 45 , 94 S. Ct. 1 15 1 (1 97 4) , hel d t ha t t he cit iz en orco m pa ny m us t re cei ve a “ sp eci al be ne fit ” th atis no t re cei ve d b y th e g en eral

3publ ic in ord er t o ju st ify the fee. The re, the pl ai nt iff ut il it y co m pa ni es ch al le ng ed
an nu al ass es sm en ts th e Co m m is si on im

po se d, wh ic h wer e in te nd edto “ reco up so m e o f th e rem ai ni ng co st s” in cu rredby the ag en cy . Id. at34 6, 9 4 S . Ct. at11 53
. Howev er, the Co m

m is si onha d d es cri be d i ts reg ul at ory act iv it ie s as be ne fic ia l t o co ns um ers an d a dd edth atit s ac ti on s

“ red ou nd edto th e b en efi t o f bo th in du strie s b y crea ti ng th e eco no m ic cl im at e fo r gr eat er u sa ge of t he servi ces of t he reg ul at edco m pani es whi ch in tu rnha ve furth er s tre ng th en edth ei r fi nanc ia l s tabi li ty and th ei r ab il it y

to sel l d eb t an d e qu it y

sec ur it ie s re qu ire d fo r cap it al ad di ti on s t o m eetev er-i nc reas in g d em an ds .” Id . at 3 48 , 94 S. Ct. at11 53 (qu ot in g t he Fed eral Po wer Co m m is si on Rep ort, Ord er No. 4 27 , 45 FPC 4 40 , 44 5 (1 97 1) ). The C ou rt n ot edth atth e Offi ce o f Man ag em en t an d B ud ge t h adis su eda ci rcu la r in st ru ct in g t ha t a r eas on ab le ch arg e

“ ‘sho ul d b e m ad e to each id en ti fiabl e rec ip ie ntfora m eas ur ab le un itor a m ou ntof Gov ern m en t s erv ic e o r pr op ert y fro m whi ch he de riv es a sp eci al be ne fit .’ ” Id . at 34 9, 9 4 S . Ct. at11 54 (qu ot in g B ud ge t Ci rcu la r No. A-2 5, Se pt . 23 , 19 59 )). The 1 ci rcu la r al so st at edth atno ch arg e sh ou ldbe m ad e fo r se rv ic es when “ ‘the ul ti m at e be ne fic ia ry

is ob sc ur e an d t he servi ce ca n b e p rimaril y co ns id eredas b en efi tt in g br oa dl y th e g en eral publ ic .’ ” Id . at 3 50 , 94 S. Ct. at11 54 (qu ot in g B ud ge t Ci rcu la r
We note that Br annen ha s not challeng ed the amount or excessiveness of the use r 1 fee . Indeed, B ranne n expressly disclaimed any

such ar gument in the district court. District Court order , Docke t No. 15 at 22 n.3. 4No. A-2 5) . Thu s, b ecau se th e Co m m is si on id en ti fie d t he publ ic as t he pri m ary be ne fic ia ry

of t he servi ces , andno t t he ut il it ie s wh o p ai d t he ass es sm en ts , th e fee s were n otpe rm it te d b y

th e fee -au th or iz in g s ta tu te . Id. at35 1, 9 4 S . Ct. at11 55
. Si nc e 1 97 6, t he Depa rtment h as ha d t he po wer t o re qu ire tax return p rep arer s to in cl ud e an id en ti fy in g n um be r on th e returns th ey

pre pa re. 26 U.S.C. § 6 10 9( a)(4 ). Befo re the 20 10 reg ul at io ns , tax pre pa rers were p erm it te d by § 61 09 (d ) to us e ei th er the ir s oc ia l s ecu rit y nu m be rs or o bt ai n afree PTIN; 2 ho wev er, i n t ha t s am e subs ect io n, Co ng res s ex pr es sl y pro vi de d t ha t t he Secr et ary co ul d b y reg ul at io n re qu ire th ata nu m be r ot he r th anth e so ci al sec ur it y nu m be r be
us ed . 26 U.S.C. § 6 10 9( d)
. The Dep art m en t p ro m ul ga te d s uc h re gu la ti on s i n 3 20 10 , exe rci si ng th is § 6 10 9( d) au th or it y an d re qu iri ng th attax return p rep arer s ob ta in an d u se a PTIN, rat he r th anall owi ng us e o f a s oc ia l s ecu rit y nu m be r.” The
sa m e reg ul at io n e xe rci se d fo r th e fi rs t t im e th e Sec ret ary’ s au th or it y un de r 31 U.S.C. § 9 70 1 t o c ha rg e an an nu al us er fee to tax return p rep arer s i n e xc ha ng e fo r

Although the Secre tary

has longhad statutory

authority under 31 U .S.C. § 9701 t o 2 charg e a use r fe e so longas it is in ex chang e for a “spe cial bene fit” as de scribed in Ne w Eng land Power, such a

fee was not promulg ated until the 2010 re gulation. Section 6109(d) pr ovides: 3 Use of soc ial security

acc ount number.-- The socia l security acc ount number issued to an individual for purpose s of sec tion 205(c)( 2)(A) of the Social Sec urity Act shall, except as sha ll otherwise be spe cified unde r re gulations of the Secre tary , be used a s the identifying numbe r for such individual for purpose s of this ti tle.
5is su in g t he PTIN. 26 C.F.R. § 1.6 10 9- 2( a), (d ). 4

Thu s, co nt rary to B ran ne n’s ar gu m en t, 3 1 U.S.C. § 97 01 an d 2 6 U.S.C. § 61 09 pro vi de st atut ory

au th or it y forth e 2 01 0 re gu la ti on s. Sec ti on 61 09 (a)( 4) pr ov id es : (a) Supp lying of i de nt ifyin g n um be rs .--Whenrequi redby regu la ti on s pr es cri be d b y

th e Sec ret ary:

. . . (4 ) Fu rn is hi ng id en ti fy in g n um be r of tax return pr ep arer .--An y

return o r cl ai m

forrefu ndpre pa redby a ta x re tu rnpre pa rer s ha ll be ar s uc h i de nt ifyin g num be r fo r se cu rin g p ro pe r id en ti fic at io n o f su ch pre pa rer, h is em pl oyer, or b ot h, as m ay

be pre sc rib ed
. 26 U.S.C. § 6 10 9( a)(4 ). Thi s s ta tu to ry pro vi si on do es two th in gs . Firs t, i t
ex pr es sl y gra nt s au th or ity

to th e Sec ret ary to pre sc rib e b y reg ul at io n t he pa rti cu la r id en ti fy in g n um

be r requi red– t ha t i s, “ su chid en ti fy in g n um be r . . . as m ay

be pr es cri be d [b y

th e Sec ret ary by regu la ti on ]. ” Seco nd , § 6 10 9( a)(4 ) al so requi res 5 th at“ an y return . . . pre pa redby a tax return p rep arersh al l b ear s uc h i de nt ifyin g The pe rtinent part of

the re gulations reads: 4 Be g inning a fter D ece mber 31, 2010, a ll tax return pr epar ers must have a pre pare r tax i dentification number or other presc ribed identify

ing numbe r that wa s applied for a nd rec eived at the time and in the manner , including the pay ment of a use r fee , as may

be pre scribed by

the Interna l Revenue Ser vice in for

ms, instructions, or other a ppropriate guidance
. 26 C.F.R. § 1.6109-2(d)
.

This authority

in the Secre tary

to prescribe the par

ticular identify

ing numbe r is 5 reinfor ced by

§ 6109(d), discusse d above, pur suant to which the Sec reta ry is give n specific authority to prescribe by

regulation that the Social Security number of tax return pr epar ers not be used. 6nu m

be r” as ha s b een ass ig ne d t o h im /h er b y th e Sec ret ary. Becaus e th e te rm “ ta x return p rep arer ” is de fin edby 26 U.S.C. § 77 01 (a)( 36 ) as m ean in g a ny pers on who pr ep ares tax returns forot he rs forco m pe ns at io n, t hi s re qu ire m en t –th atan y return pr ep aredby a tax return p rep arer be ar h is /h er as si gn edid en ti fy in g n um be r – m ean s th ata ta x re tu rnpre pa rer c an no t p rep are t ax returns forothe rs forco m pe ns at io n wit ho utha vi ng th e requi redid en ti fy in g n um be r. Andbe cau se § 6 10 9( a)(4 ) 6
ex pr es sl y au th or iz es th e Sec ret ary to ass ig n s uc h n um be rs , a pe rs on can no t p rep are ta x re tu rn s fo r an ot he r fo r co m pe ns at io n u nl es s t ha t p ers on ob ta in s fr om th e Secr et ary th e requi redid en ti fy in g n um be r. Forth is reas on , when th e Sec ret ary as si gn s t he id en ti fy in g n um be r (the pre pa rer t ax id en ti fic at io n n um be r or “ PTIN”), th e Sec ret ary is co nf

erri ng a sp eci al be ne fitup onth e rec ip ie nt , i.e. the pri vi le ge of pr ep ari ng tax returns forot he rs forco m pe ns at io n. W e rea di ly con cl ud e th at , un de r th e p la in lan gu ag e o f § 6 10 9( a)(4 ), th e PTIN is is su edto tax return p rep arer s fo r a s pe ci al be ne fit . Andwe read il y co nc lu de th at th e b en efi t –th e p riv il eg e o f pr ep ari ng tax returns forot he rs for co m pe ns at io n –is th e k in d o f “ sp eci al be ne fit ” th atqu al ifi es un de r New Eng landPo wer. The us er fe e

For this reason, a

nd beca use, as noted a

bove and in the pr ece ding f ootnote, 6 Br annen c annot use his own socia l security number, B ranne n’s repeate d, though c onclusory , asser tion that he can pr epar e re turns for other s for c ompensation without the Secre tary ’s PTI N is wholly without merit. 7he re cl earl y

co nf ers a be ne fitwhi ch is no t re cei ve d b y th e g en eral publ ic
. Ourco nc lu si on is rei nf

or cedby the ex pl an at io n p ro vi de d wh enth e Sec ret ary pr op os edth e ch al le ng edreg ul at io ns . Whe n t he Depa rtment p ro po se d t he reg ul at io ns , itex pl ai ne d t ha t: In di vi du al s wh o o bt ai n aPTIN rece iv e th e ab il it y to pre pa re al l o r subs ta nt ia ll y

all of atax return o r cl ai m forrefu nd . The ab il it y

to pr ep are a ll or s ub st an ti al ly all o f a t ax return o r cl ai m forrefu ndis a sp eci al be ne fit
. 75 Fed . Reg . 43 ,11 0, 4 3,1 12 (Ju ly 23, 2 01 0) . It fu rth er ex pl ai ne d t ha t t he co st s t o be reco ve redwere fo r th e d ev el op m en t an d m ai nt en an ce o f th e IRS in fo rm at io n t ech no lo gy syste m th atin te rfac es with t he ve nd or ; t he de ve lo pm en t an d m ai nt en an ce o f in te rn al ap pl ic at io ns ; IR S cu st om er s erv ic e supp ort act iv it ie s, wh ic h i nc lu de de ve lo pm en t an d m ai nt en an ce o f an IRS Web si te an d c al l ce nt er s ta ffi ng ; an d p ers on ne l, ad m in is tra ti ve , and m an ag em en t s up po rt n eed edto ev al ua te an d a ddres s t ax co m pl ia nc e is su es , in ve st ig at e an d a dd res s co nduc t an d s ui tabi li ty iss ue s, an d ot he rwis e supp ort an d e nf or ce t he pro gr am s t ha t re qu ire in di vi du al s t o ap pl y foror r en ew a PTIN. Id
. 7 Bran ne n a ls o a rg ue s t ha t t he im po si ti on of afee af

te r no ne ha d b een ch arg ed

The Gove rnment also points out that tax return pr epar ers r ece ive the spec ial 7 benef it of not havingto use their socia l security numbers, which use could potentially compromise the number ’s conf identiality . Additionally , the use of a single PTI

N for e ach tax return pr epar er f

acilitates identifica

tion of eac h prepa

rer by the I RS and allows the ag ency to forwa rd pre pare rs targ eted upda tes of par ticular re levanc e to the ty pe of c lients the prepa

rer serve s. 8pr ev io us ly vio la te s t he st atut e. W e d is ag ree. Br an ne n h as cit edno th in g t o s up po rt

th is arg um en t, an d we s ee n ot hi ng inth e la ng ua ge of § 97 01 th atsu gg es ts th atth e au th or it y to ch arg e a u se r fee m

us t b e ex erci se d a t t he fir stm om en t t ha t Co ng res s co nf ers th e au th or it y . W e kno w of n o t rad it io n o f st atut ory co ns tru ct io n t ha t wo ul d in di cat e su ch anunus ua l i nt erp ret at io n. No r is th ere a nyth in g i n t he lan gu ag e o f § 9 70 1, n orin lo gi c, th atwou ldpro hi bi t anag en cy fro m im pl em en ti ng a fee f

or se rv ic es th atitha d p rev io us ly pro vi de d fo r free . Mor eo ve r, as th e ab ov em en ti on edex pl an at io ns acco m pa nyin g t he pro po se d re gu la ti on s s ug ge st , th e Dep artm en t ap pa ren tl y

co nt em pl at eden hanc edservi ces fortax return p rep arer s up on th e im

pl em en ta ti on of t he reg ul at io ns an d t he fee.

III. CONCLUSI ON To s umm ari ze, 3 1 U.S.C. § 97 01 pro vi de s au th or it y to im po se a us er fe e so lo ng as t he ag en cy

co nf ers a sp eci al be ne fit . And26 U.S.C. § 6 10 9( a)(4 ) an d (d )
ex pr es sl y pro vi de au th or it y

forth e Sec ret ary to requi re tha t t ax return p rep arer s u se th e PTIN as si gn edby the Depa rtment, i .e. a nu m be r ot he r th anth e p rep arer ’s so ci al
se cu rit y nu m be r. And§ 6 10 9( a)(4 ) ex pr es sl y pro vi de s t ha t an y

return p rep aredby a ta x re tu rnpre pa rer s ha ll be ar the nu m be r as si gn edby the Depa rtment, m ean in g th ata ta x re tu rnpre pa rer c an no t p rep are re tu rn s fo r othe rs forco m pe ns at io n wit ho utsu ch nu m

be r. Becaus e in ex ch an ge forth e u se r fee th e Dep art m en t as si gn s 9a PTIN an d c on fers a sp eci al be ne fitup on tax return p rep arer s (i .e., th ey are thu s pr iv il eg edto pre pa re re tu rn s fo r ot he rs forco m pe ns at io n) , we ho ldth atth e Dep artm en t’s u se r fee co m pl ie s wi th § 9 70 1. Acco rd in gl y , we affi rm th e d eci si on 8 of th e d is tri ctco urt. 9 AFFIR MED.

Br annen’ s sugg estion that the g ener al public may also bene fit from the incr ease d 8 eff iciency of the Department’s c ollection eff orts does not undermine our holding. Eve n assuming the re is some such g ener al bene fit, it is clear that the a ssignment of a PTI N to a tax prepa rer , and the r esulting privilege to prepa re r eturns for

others for

compensation, qualifies as a specia l benef

it “‘above and beyond those which a ccr ue to the public at larg e.’” New E ng land Power, 415 U.S. at 349 n.3, 94 S. Ct. at 1154 n.3 (quoting f rom Budg et Circular

No. A-25)
. Indeed, in the sa

me footnote, the Court a lso quoted with approval the Circ ular’s e x ample of a specia l benef

it: “‘e.g . rec eivinga . . . license to car ry on a spec ific business.’” I d.; see a lso Nat’l Cable Tele vision Ass’n, 415 U.S. at 340, 94 S. C t. at 1149 (g iving a s an example of a permissible user f

ee a “fe e . . . incident to a voluntar y act, e .g ., a re quest that a public a g ency permit an a

pplicant to prac tice law” ). In light of our

dispositi on on the basis of the pla in languag e of the statutory 9 provisions, we nee d not addre ss whether the Depa rtment may

also have had authority

to promulg ate the c halleng ed re gulations on the basis of a g ener al licensingauthority
. 10