The IRS and JD Asking for an Injuction on Tax Preparation Ruling

The Internal Revenue Service and Justice Department are asking for an injunction against tax preparation regulations to be lifted and plan to appeal the ruling of a judge who granted the move. In the meantime, preparers who have become Registered Tax Return Preparers are wondering what is going to happen with the money they paid to register under the program.

It's all up in the air for thousands of paid preparers after a judge in Washington D.C. held the IRS did not have the authority to regulate paid preparers and issued a permanent injunction to block its enforcement of the regulations.

For preparers, the fall out of from the ruling goes beyond simply paying the registration fee. On an IRS Facebook page, preparers complained that they had paid for new business cards reflecting their registration and signed up for and paid for CPE credits. In email and Facebook comments, more than one preparer asked if they could take the examination anyway. Some on the discussion boards on TaxAlmanac.com asked if the IRS could make registration voluntary.

In general, comments appear to strongly support the regulation of preparer communities. Intuit issued a statement expressing its disappointment in the court ruling. In a prepared statement, John Ams, EVP of the National Society of Accountants, said, "We have long supported the registration of paid preparers and continuing education requirements so that preparers have the up-to-date knowledge needed to prepare complete and accurate tax returns for their clients."

Under the new regulations, IRS required all paid preparers to receive an identification number and prepapers other than CPAs, Enrolled Agents and Tax Attorneys would have been required to pass an examination. The suit was brought by three preparers and a conservative rights group.

No one is yet certain how far the court's ruling extends. The IRS said in a prepared statement that it is "continuing to evaluate the scope of the court's order in determining consistent next steps."