Source: http://www.scribd.com/doc/234040282/AICPA-v-IRS
Timestamp: 2015-03-28 11:17:36
Document Index: 368819285

Matched Legal Cases: ['§ 551', '§ 330', '§ 4', '§ 4', '§ 4', '§ 4', '§ 706']

P. 1AICPA v. IRSAICPA v. IRSRatings: (0)|Views: 430|Likes: 1Published by Kelly Phillips ErbAICPA complaint as filed, challenging the legality of the new Annual Filing Season Program, a voluntary program to regulate tax return preparers.AICPA complaint as filed, challenging the legality of the new Annual Filing Season Program, a voluntary program to regulate tax return preparers.More info:Categories:Types, Business/Law, Court FilingsPublished by: Kelly Phillips Erb on Jul 16, 2014Copyright:Traditional Copyright: All rights reservedAvailability:Read on Scribd mobile: iPhone, iPad and Android.download as PDF, TXT or read online from ScribdFlag for inappropriate content|Add to collectionSee moreSee lesshttps://www.scribd.com/doc/234040282/AICPA-v-IRS03/11/2015pdftextoriginal 1
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, 1455 Pennsylvania Avenue, NW Washington, DC 20004, Plaintiff, v. Civil Action No. 14-1190 INTERNAL REVENUE SERVICE 1111 Constitution Avenue, NW Washington, DC 20224, and JOHN A. KOSKINEN, in his official capacity as Commissioner of Internal Revenue, Office of the Commissioner 1111 Constitution Avenue, NW Washington, DC 20224, Defendants. COMPLAINT AND PRAYER FOR DECLARATORY AND INJUNCTIVE RELIEF Plaintiff AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (“AICPA”) for its complaint against Defendants the INTERNAL REVENUE SERVICE (“IRS”) and the Honorable JOHN A. KOSKINEN, in his official capacity as Commissioner of Internal Revenue (“Commissioner”)
, alleges, by and through its attorneys, as follows: Case 1:14-cv-01190 Document 1 Filed 07/15/14 Page 1 of 23
PRELIMINARY STATEMENT 1.
This is an action under the Administrative Procedure Act, 5 U.S.C. §§ 551-706 (“APA”) challenging the IRS’s recently issued
rule entitled the “
(“AFS rule”)
. The AFS rule is an illegitimate exercise of government power, as it violates the APA and also represents an impermissible end run around Loving v. IRS , a recent decision by the U.S. Court of Appeals for the District of Columbia Circuit which invalidated a nearly identical IRS rule. Notably, in Loving the Court ruled that the IRS lacks statutory authority under 31 U.S.C. § 330 to regulate unenrolled tax return preparers. Undeterred by the C
ourt’s ruling, the IRS and the Commissioner seek to implement a nearly identical rule disguised as a purportedly “voluntary” program. Th
e IRS’s actions are an obvious attempt to bypass the C
ourt’s binding decision and to assume powers Congress has not given it. 2.
In issuing the rule, the IRS ignored the notice and comment requirements of the APA. Instead, the IRS adopted the AFS rule in the form of a Revenue Procedure. See Rev. Proc. 2014-42, 2014 WL 2931528, § 4.05 (June 30, 2014). By circumventing the protections afforded by the APA, the IRS avoided having to respond to comments that would have demonstrated that the AFS rule is fatally flawed and arbitrary and capricious. 3.
In 2011, the IRS adopted regulations requiring unenrolled tax return preparers to pass a written examination consisting of 100 scored questions, pass a character and fitness assessment, and complete 15 hours of continuing education training each year. See 76 Fed. Reg. 32,286, 32,290 (June 3, 2011); Internal Revenue Serv., Registered Tax Return Preparer Test: Candidate Information Bulletin, at 4 (Apr. 16, 2012), available at http://www.irs.gov/pub/irs-utl/rtrpcandidateinfobulletin.pdf. This rule was invalidated in Loving . Case 1:14-cv-01190 Document 1 Filed 07/15/14 Page 2 of 23
The AFS rule is nearly identical to the rule invalidated in Loving . Among other requirements, the new rule requires tax return preparers to pass a written examination consisting of at least 100 questions, complete between 15 and 18 hours of continuing education each year, and agree to be subject to portions of Treasury Department Circular No. 230
— which regulates practice before the IRS
— to which they would not otherwise be subject. See Rev. Proc. 2014-42, § 4.05. In return for satisfying these criteria, participants will be awarded a “
and be listed in a newly created Directory of Federal Tax Return Preparers. Id.
§ 4.02; Internal Revenue Serv., IRS Unveils Filing Season Program for Tax Return Preparers
, available at http://www.irs.gov/uac/Newsroom/IRS-Unveils-Filing-Season-Program-for-Tax-Return-Preparers,-Answers-Frequently-Asked-Questions. Similar to the character and fitness requirement contained in the previous rule, the AFS rule also provides that certain individuals are ineligible. For example, an individual who has previously been disbarred, suspended, or disqualified from practicing before the IRS may not obtain a Record of Completion or a place in the Directory of Federal Tax Return Preparers during the period in which he is disbarred, suspended, or disqualified. Rev. Proc. 2014-42, § 4.06(1). 5.
The IRS lacks statutory authority to proceed with the AFS rule. Notably, the IRS cites no authority for its new rule. Without statutory authority, the AFS rule is invalid. See 5 U.S.C. § 706(2)(C). 6.
Indeed, the fact that the IRS has proceeded with the AFS rule is particularly brazen in light of the Court’s decision in Loving , which expressly stated that although “[i]t mi
ght be that allowing the IRS to regulate tax-return preparers more stringently would be wise as a policy matter,” “that is a decision for Congress and the President to make if they wish by enacting new legislation.”
Loving v. IRS , 742 F.3d 1013, 1022 (D.C. Cir. 2014). In fact, the IRS Case 1:14-cv-01190 Document 1 Filed 07/15/14 Page 3 of 23
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