Court upholds IRS’s Annual Filing Season Program

On August 14, 2018, the U.S. Court of Appeals for the District of Columbia Circuit rejected the AICPA’s argument that IRS’s voluntary tax return preparer program is unlawful. (AICPA v. IRS (August 14, 2018) U.S. Court of Appeals, District of Columbia, Case No. 16-5256) This means the IRS may continue conducting its Annual Filing Season Program (AFSP) for unenrolled preparers.

AICPA challenged the program, claiming it contrary to the 2014 court ruling halting IRS’s authority to regulate tax preparers (the Loving case), and it violated the Administrative Procedure Act because IRS did not use a notice-and-comment rulemaking process before implementing the voluntary program. (Loving v. IRS (February 11, 2014) U.S. Court of Appeals for the District of Columbia Circuit, Case No. 13-5061)

Following the rejection of the Registered Tax Return Preparer program as a result of Loving, the IRS announced the voluntary AFSP, which it designed to encourage education and filing season readiness for paid tax return preparers. (Rev. Proc. 2014-42) Shortly after the IRS announcement, the AICPA filed a lawsuit in the D.C. district court alleging that the program constitutes an unlawful exercise of government power and an end run around the Loving decision. The court held that the AICPA did not have standing to sue the IRS over its implementation of the program, and dismissed the case.