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December 3, 2022

Judge: AICPA Was a Little Melodramatic About IRS’s Voluntary Registration Program

Earlier this year, the AICPA warned that they would go on a jihad against the IRS if our favorite sovereign tax authority went ahead with a plan to offer voluntary tax preparer registration. Getting really dramatic about things, the AICPA basically complained that the IRS plan conflicted with everything the CPA designation stands for and would cut into their business.

They didn't really make that the core of their argument against a voluntary tax preparer program, of course, but it was strongly hinted to:

The American Institute of CPAs (AICPA) has expressed strong concern that the Internal Revenue Service’s (IRS) proposed voluntary certification program for tax return preparers “would cause significant legal problems that may ultimately frustrate the IRS’s goals, confuse the public, and lead to litigation.”

Lead to litigation it did. When the IRS continued with its plan despite strong opposition from the AICPA, the AICPA sued them:

By implementing a purportedly “voluntary” program that is mandatory in effect, the rule is an end-run around Loving v. IRS, a federal court ruling which struck down the IRS’s earlier attempt to regulate tax return preparers. The IRS simply does not have the authority to proceed with the new rule. By doubling the number of categories of tax return preparers to eight, the rule will also confuse consumers. Worse yet, the new rule will do nothing to address the problem of unethical or fraudulent tax return preparers – which should be a top priority.

As a result, the AICPA has filed suit in federal court to prevent the IRS from moving ahead with this unjustified and unlawful program.

It's the "confuse consumers" that got the suit thrown out in court this week.

According to Accounting Today:

In his ruling Monday, Boasberg said the AICPA lacked standing and would not be harmed by a voluntary program. “Arguing that AICPA and its members have suffered no harm from the program, Defendants IRS and the IRS Commissioner have now moved to dismiss the suit for lack of standing. Agreeing, the Court will grant Defendants’ Motion,” wrote Boasberg.

He disagreed with the AICPA’s contention that customers would use unenrolled tax preparers who participated in the Annual Filing Season Program instead of CPAs, noting, “CPAs already operate in a competitive market in which several different types of qualified preparers have carved out individualized niches. AICPA has not demonstrated that permitting unenrolled preparers to distinguish themselves vis-à-vis other unenrolled preparers will result in competitive injury to CPAs and accounting firms who compete on the basis of more rigorous credentials.”

Ouch. The AICPA isn't used to lacking standing, that one has to burn a little.

The AICPA told AT "we are surprised and disappointed by the ruling." They aren't sure if they will continue this fight or simply move on with their lives. We will, of course, keep you posted.

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