Court Denies Motion to Suspend Injunction in Loving v. IRS Case

[JRS]

It appears that the Court has indeed responded to the IRS' motion to suspend the injunction it issued on January 18 with a resounding thud today. While the motion was denied, the court did articulate that the IRS' PTIN system is not at issue, which will offer at least some clarity as preparers move forward with tax season.

Citing several factors including its belief that (1) the order is not likely to be overturned by an appellate court; (2) that the IRS overstated the harm to itself due to the injunction; (3) that the IRS understated the harm that would come to the plaintiff; and (4) that the IRS' argument about the public's interest was not convincing and did not take into account the harm that may befall the unlicensed preparer.

The Court further explains, "As the factors beyond likelihood of success do not decisively tilt in favor of the IRS - indeed, they tip somewhat against - the Court sees no basis to lift its injunction pending appeal." And so, the Court ordered as follows:

"1. Defendants' Motion to Suspend Injunction Pending Appeal is DENIED; and

2. The Injunction is MODIFIED to make clear that the IRS is not required to suspend its PTIN program, nor is it required to shut down all of its testing and continuing-education centers; instead, they may remain, but no tax-return preparer may be required to pay testing or continuing-education fees or to complete any testing or continuing education unless and until this injunction is stayed or vacated by the Court of Appeals."

[mcb39]

That sounds to me as though, as of now, it is a matter of choice. Therefore, my certificate stays on the wall. I have to say, however, that "I did it and I'm glad". The old clients are impressed and say they are proud of me. I had a new client call yesterday and ask if I was a CPA. My answer was "No, but I am a Registered Tax Return Preparer". He said, "Oh, all right!" and set up an appointment. I do think that it matters.

[JohnH]

IRS did the typical thing that a bureaucrat does when a decision goes against them. They overreacted by claiming the decision would shut down the RTRP program and cost millions upon millions of dollars. When you have virtually unlimited resources at your disposal, you can make a really big mess of things with no financial consequences and no personal accountability.

[OldJack]

So the question remains, is there such a legal thing as a "Registered Tax Return Preparer"?

[JohnH]

I think the courrt was saying that IRS can issue PTIN's, and thy can call that person a RTRP (or anything else they want to call them). But the IRS cannot charge for the PTIN or for the RTRP designation, and they cannot require CPE of RTRP's, until they have statutory authority to do so. If I'm correct, then there is still a RTRP designation unless the IRS decides to overreact again.

[mcb39]

I think the courrt was saying that IRS can issue PTIN's, and thy can call that person a RTRP (or anything else they want to call them). But the IRS cannot charge for the PTIN or for the RTRP designation, and they cannot require CPE of RTRP's, until they have statutory authority to do so. If I'm correct, then there is still a RTRP designation unless the IRS decides to overreact again.

That was my understanding of the situation..........I hope.

[jainen]

>>a resounding thud today<<

Let's not read too much into the fact that the same judge who issued the ruling still stands by it. However, it seems that now he is starting to back off. He emphasizes that the PTIN system is indeed valid, presumably fees and all, and that is the core of tax preparer registration as it includes CPAs and EAs. The fees he ruled against are the 3rd party costs for testing and CPE. Meanwhile, he makes clear that the entire RTRP program structure will remain intact, albeit non-mandatory, until the statutory authority is clarified.

JohnH is right about the bureaucratic element. For all the rhetoric about "the harm that may befall," this case is just about who gets to make the decision, not what the decision is.

[OldJack]

>>this case is just about who gets to make the decision, not what the decision is<<

Well... I read it that the IRS cannot require a tax preparer (a non CPA or EA) to be a RTRP.