IRS files motion to suspend injunction in return preparer regulation case

BY ALISTAIR M. NEVIUS, J.D.

The IRS on Wednesday filed a motion in federal court to suspend an injunction that forbids it from continuing with its registered tax return preparer program, pending appeal of the case (Motion to Suspend Injunction Pending Appeal, D.D.C. 1/23/13). The IRS also indicated that it intends to file a Notice of Appeal within 30 days, although Solicitor General Donald Verrilli is the person who will make the decision about whether the government will pursue an appeal, and at the time the motion was filed, he had not yet made that decision.

On Jan. 18, the U.S. District Court for the District of Columbia held that the IRS exceeded its statutory authority when it issued rules regulating the practice of unenrolled tax return preparers and enjoined the IRS from enforcing those rules (see “Federal Court Strikes Down IRS Tax Return Preparer Registration Program”).

In its motion, the IRS asks for the injunction to be suspended on four grounds: (1) that it has a reasonable likelihood of prevailing on appeal; (2) that it and the public will suffer irreparable harm if the injunction is not suspended; (3) that the plaintiffs will not be harmed by the request; and (4) that suspending the injunction will serve the public interest.

The IRS moved in the alternative for a suspension of at least 14 days to allow it to seek relief from the appeals court.

The IRS states in its motion that more than 700,000 tax return preparers have registered with the IRS and almost 100,000 have registered to take the competency test. The IRS also notes that it has received more than $100 million in registration and competency fees.

Alistair M. Nevius ( anevius@aicpa.org ) is the JofA’s editor-in-chief, tax.

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