Court to IRS: Sit Down, Shut Up, and Leave Mom-and-Pop Tax Prep Firms Alone

If you have a neighborhood guy or gal who helps
you sort your receipts every April, you’ll be happy to know they
can breathe a little easier this tax season.

In 2012, the IRS decided unilaterally to impose new continuing
education and licensing requirements on tax prep companies,
threatening to put little guys out of business, while protecting
giants like H&R Block.

The libertarian legal outfit Institute for Justice (IJ) helped
mom-and-pop tax prep firms
challenge the new
regs, and despite some
time in legal limbo, they’ve been
winning their way up the legal chain. 

In my inbox today, this good news from IJ: 

Today, the D.C. Circuit Court of Appeals ruled that the IRS had
no legal authority to impose a nationwide licensing scheme on
tax-return preparers.  The decision affirms a January 2013
ruling by U.S. District Court Judge James E. Boasberg, which struck
down the IRS’s new regulations as unlawful.  Both courts
rejected the agency’s shocking claim that tax-preparer licensure
was authorized by an obscure 1884 statute governing the
representatives of Civil War soldiers seeking compensation for dead
horses.

Here’s what the D.C. Circuit Court had to say:

“the IRS may not unilaterally expand its authority through such
an expansive, atextual, and ahistorical reading of [the
statute].”

This is pretty much the judicial equivalent of shouting “BOOM”
and dropping the mic.

And rightly so. If the new rules had been enforced, they would
have endangered the livelihoods of tens of thousands of small
businessmen and entrepreneurs, not to mention the sanity of
thousands of people who might have started prepping their taxes on
their own.