IRS Tax Preparers

Loving v. IRS
Challenging the IRS’s Authority To License Tax Return Preparers

Elmer Kilian

Elmer Kilian hangs a wooden shingle outside his home during tax season, as he has for the past 30 years.

IRS Video
IRS Protectionism: New Licensing Scheme Challenged in Major Federal Lawsuit

Congress never gave the IRS the authority to license tax preparers, and the IRS can’t give itself that power.

But in 2011, the IRS imposed a sweeping new licensing scheme that forces tax preparers to get IRS permission before they can work. This is an unlawful power grab that exceeds the authority granted to the IRS by Congress.

The burden of compliance will fall most heavily on independent tax return preparers and small businesses. Unsurprisingly, big firms such as H&R Block and Jackson Hewitt support the licensing scheme. As The Wall Street Journal explained: “Cheering the new regulations are big tax preparers like H&R Block, who are only too happy to see the feds swoop in to put their mom-and-pop seasonal competitors out of business.”

These regulations are typical government protectionism. They benefit powerful industry insiders and at the expense of entrepreneurs and consumers, who will likely have fewer options and face higher prices. But tax preparers have a right to earn an honest living without getting permission from the IRS. And taxpayers—not the IRS—should be the ones who decide who prepares their taxes.

That is why on March 13, 2012, three independent tax preparers joined the Institute for Justice in filing suit against the IRS in the U.S. District Court for the District of Columbia. This lawsuit challenges the IRS’s statutory authority to impose this licensing scheme, and seeks to overturn regulations that would affect an estimated 350,000 tax return preparers, forcing many of them to stop working in the occupation of their choice.


 
 
 

Essential Background

Videos and Images

Backgrounder: Loving v. IRS: Challenging the IRS’s Authority To License Tax Return Preparers

Video on this case

Client Photo

Latest Release: Independent Tax Preparers Beat IRS In Federal Appeals Court (February 11, 2014) Video explaining IRS deadline
Audio Recording of Oral Argument (September 24, 2013)
Launch Release: Tax Preparers Sue the IRS, Fight Unlawful Licensing Scheme (March 13, 2012)
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Additional Releases Legal Briefs and Decisions
Release: Court Solidifies Ruling, Protects Independent Tax Preparers Nationwide (February 1, 2013) D.C. Circuit Court of Appeals documents

D.C. Circuit Court of Appeals Opinion (February 11, 2014)

IRS Reply Brief (June 5, 2013)

Amicus Brief in Support of the Plaintiffs (May 24, 2013)

Release: Tax Preparers Audit IRS: Agency Numbers Off by Over 2,000 Percent (January 30, 2013)

Plaintiffs’ Merits Brief (May 17, 2013)

Release: Empire Strikes Back; IRS Announces It Seeks to Continue Limiting Competition, Extracting Millions From Tax Preparers (January 24, 2013)

IRS Opening Appellate Brief (March 29, 2013)

Release: Independent Tax Preparers Defeat IRS Licensing Requirement (January 18, 2013)

D.C. Circuit Order Denying IRS’s Motion for Stay (March 27, 2013)

Release: As Year-End Deadline Looms, Independent Tax Preparers Continue Fight Against IRS Power Grab (December 12, 2012) Plaintiffs’ Response to IRS Motion for Stay in D.C. Circuit (March 8, 2013)
Release: IRS Celebrates Anniversary of Unlawful Power Grab (June 6, 2012)

IRS Motion for Stay in D.C. Circuit Court of Appeals (February 25, 2013)

Release: As Tax Day Looms, Independent Tax Preparers Continue Fight Against IRS Power Grab (April 13, 2012)

Declaration in Support of IRS Motion for Stay in D.C. Circuit Court of Appeals (February 25, 2013)

District Court documents
Court Opinion Denying IRS’s Motion for Stay (February 1, 2013)
Plaintiffs’ Memorandum in Opposition to IRS Motion for Stay (January 29, 2013)
IRS Motion to Suspend Injunction Pending Appeal and Supporting Memorandum (January 23, 2013)
Declaration in Support of IRS Motion for Stay (January 23, 2013)
Court Opinion and Order in Favor of Plaintiffs (January 18, 2013)
Plaintiffs’ Motion for Leave to File Surreply and Surreply (December 17, 2012)
IRS Reply Memorandum (December 10, 2012)
Plaintiffs’ Consolidated Memorandum in Opposition and Reply (November 20, 2012)
IRS Brief in Support of IRS’s Motion for Summary Judgment and Opposition to Plaintiffs’ Motion for Summary Judgment (October 26, 2012)
Plaintiffs' Motion for Summary Judgment and Supporting Memorandum (September 28, 2012)
IRS Answer to IJ's Complaint (June 4, 2012)
Complaint (March 13, 2012)
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Case Timeline

Filed Lawsuit: 

 

March 13, 2012

Court Filed:

 

United States District Court for the District of Columbia

Decision(s):

 

 Current Court: U.S. Court of Appeals for the District of Columbia Circuit

  Status:

 
Victory for plaintiffs in U.S. district court, currently on appeal in the D.C. Circuit
  Next Key Date:

Awaiting decision from D.C. Circuit

 Maps, Charts and Facts

Op-eds, News Articles and Links

none available Article: IRS Loses Again on Tax Preparers The Wall Street Journal (February 1, 2013)
Article: IRS Stopped 'Dead In Its Tracks' In Efforts To Regulate Tax Preparers Forbes (January 19, 2013)

 

Article: IJ Sues the IRS Liberty & Law (April, 2012)

 

Op-Ed: Crony capitalism versus economic liberty Washington Times (March 13, 2012)
Interview: IJ Attorney Dan Alban on CNBC’s The Kudlow Report (March 13, 2012)
Article: Lawsuit Challenges Federal Licensing of Tax Preparers CNS News via Associated Press (March 12, 2012)
Article: H&R Blockheads: The IRS wants to save you from your rogue tax accountant The Wall Street Journal (January 7, 2010)

 



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