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Expanded IRS regulations for tax preparers still on hold

It's been a few months now since we've updated you on the status of efforts by the IRS to impose a more comprehensive regulatory framework on professional tax preparers. As we explained in our February 28 post, the IRS has had to backtrack on these efforts.

The backtracking came after a federal court ruled earlier this year that the IRS had exceeded its authority in imposing such new standards as a competency exam and continuing education requirements.

California and some other states have their own regulatory structures for tax preparers. The federal court ruling does not affect those state-level programs.

The backtracking by the IRS continued last month. The agency announced it would issue refunds of fees it had already collected for the competency tests it was intending to administer to registered professional tax preparers. Those tests were blocked by an injunction from the judge who found that the IRS had exceeded its statutory authority with the new regulations on tax preparers.

The IRS is now processing the refunds. The agency expects them to be distributed by July 19 - five weeks from now.

To be sure, the IRS still has a role to play in facilitating the role of professional tax preparers in the federal tax system. The IRS received court permission in February to resume its operation of a registration system for tax preparers. That system assigns a Preparer Tax Identification Number, or PIN for short.

But the IRS failed in its attempt to get a federal appeals court to expedite the agency's appeal of the ruling striking down the competency exam and continuing education requirements

Source: Accounting Today, "IRS to Refund Fees for Canceled Tax Preparer Tests," Michael Cohn, May 17, 2013

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