Mom-and-Pop Tax Prep Firms Defeat IRS!

This just in from the Institute for Justice:

A federal court today just struck down the IRS’s new licensing rules....

Three independent tax preparers—Sabina Loving of Chicago, John Gambino of Hoboken, N.J., and Elmer Kilian of Eagle, Wisc.—joined forces with the Institute for Justice in filing suit against the IRS in the U.S. District Court for the District of Columbia. 

Late today, U.S. District Court Judge James E. Boasberg ruled against the IRS and in favor of the tax preparers.

“Today’s ruling is a victory for hundreds of thousands of tax preparers across the country and the tens of millions of taxpayers who rely on them to prepare their taxes,” said Attorney Dan Alban of the Institute for Justice, the nation’s leading legal advocate for the rights of entrepreneurs. “This was an unlawful power grab by one of the most powerful federal agencies and thankfully the court stopped the IRS dead in its tracks.  The court ruled today that Congress never gave the IRS the authority to license tax preparers, and the IRS can’t give itself that power.”

The court enjoined the IRS from enforcing its new licensing scheme for tax preparers, which was poised to put tens of thousands of tax preparers out of business. ...

Judge Boasberg further recognized that the IRS recently did a “flip-flop” with regard to its ability to license tax preparers, declaring for years it did not have the authority to do so but only recently claiming that it did have that power. 

The IRS can appeal this ruling to the U.S. Court of Appeals for the District of Columbia Circuit. 

Here's a quick reminder of the stakes in this case, which pitted small tax prep firms against a raft of unauthorized new rules from the Internal Revenue Service that would have put many of them out of business:

At the end of last year, I blogged about new Internal Revenue Service (IRS) rules that require small-time tax preparers to pay annual fees, take IRS exams, and obtain 15 hours of expensive continuing education.  Attorneys and certified public accountants are exempt from the requirements, and big tax firms like H&R Block actually backed the regulation, which will put many of their seasonal competitors out of business.

The economic litigation firm, Institute for Justice (IJ), filed a suit in March on behalf of several tax preparers with the U.S. District Court for the District of Columbia. But the new rules kicked in while they were still waiting for a ruling.

That leaves up to 350,000 mom-and-pop operations with an uncertain future. It is too late for them to comply with the law’s continuing education requirements. But the court could rule any day, making it theoretically possible for them to accept clients this tax cycle.


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  • StephT||

    God, I needed a victory for the good side today.

    But I predict a relentless campaign of selective auditing in the future. Our nation is led by the corrupt.

  • John A. Estrada||

    like Chad answered I'm dazzled that a mom able to earn $4508 in 1 month on the internet. have you seen this page.

  • Sevo||

    "I'm dazzled"
    Naah, you're stooopid.

  • LTC(ret) John||

    I was about to rise in fierce defense of Estrada, but then I noticed it wasn't Erik....carry on.

  • Eduard van Haalen||

    I never thought I would be so glad that someone named Gambino won a victory against the government.

  • Fist of Etiquette||

    This is a tragedy for not just H. but also R.

  • Libertymike||

    Two cocks that just had to be Block[ed].

  • wareagle||

    okay...that was pretty good.

  • Hugh Akston||

    It's kind of sad that we're cheering for the victory of an industry whose very existence is necessitated only by the overly convoluted and burdensome state revenue apparatus.

  • Tulpa (LAOL-PA)||

    Turn off your beam into my mind.

  • Hugh Akston||

    So this is what madness feels like.

  • Tulpa (LAOL-PA)||

    I can't trust your conversion to Law And Order Libertarianism until you've been through the secret initiation ceremony. I can't share the details of the ceremony here, but suffice it to say if you don't like being urinated on you probably won't make it through.

  • Hugh Akston||

    I've been posting at H&R for five years. You really think I haven't gotten used to being peed on?

  • Dweebston||

    I feel pissed on with most reason stories, so that feeling should be dearly familiar.

  • Hugh Akston||

    Just eat a banana, it seems to counteract some of the effects.

  • Archduke Pantsfan||

    I'm not gonna fall for that trick like Joe Pesci in "Goodfellas" did.

  • Ted S.||

    I thought this is what madness feels like.

  • Tulpa (LAOL-PA)||

    Not quite ready to cheer this. Tax preparers may not be coercive, but without a convoluted tax code they would not be in business.

    These same mom and pop firms we're cheering today would join with H&RB; in squeal like stuck pigs if we ever tried to simplify the tax code.

  • Libertymike||

    The court's decision was predicated upon statutory grounds.

    I'm with you.

  • Xenocles||

    "These same mom and pop firms we're cheering today would join with H&RB; in squeal like stuck pigs if we ever tried to simplify the tax code."

    Maybe it will cost me some purity points, but I don't mind cheering for the lesser evil in some fights.

  • robc||

    Considering that is normally Tulpa's argument, this one seems weird.

    He is right, but I see this as a victory over Rent Seeking. The fact that the victors also rent seek at a different level is beside the point.

  • Tulpa (LAOL-PA)||

    It's one thing to vote for the lesser evil, another to cheer for the lesser evil.

    And I'm not even sure this is the lesser evil, since the M&P's going out of biz means fewer, and less sympathetic, opponents when we seek to simplify the tax code.

  • Death Rock and Skull||

    A guy named Gambino from Hoboken? That's awesome.

  • Death Rock and Skull||

    Kilian is a pretty good name to have, too.

  • LTC(ret) John||

    Only in reruns, my friend.

  • waaminn||

    I think thats awesome, those dudes are totally rocking it. Wow.

  • GroundTruth||

    Every once in a while the good guys actually win one!

  • The Late P Brooks||

    These same mom and pop firms we're cheering today would join with H&RB; in squeal like stuck pigs if we ever tried to simplify the tax code.

    You should get a job in a movie theater.

  • Scruffy Nerfherder||

    Yay, I think.

  • Hyperion||

    Glad to hear this, hope it lasts. I have a friend who does this in part for a living. Doesn't affect me personally as I have done my own taxes since the first time I had to file. But being a Libertarian means caring not only about your own rights, but everyone else also, unlike so called liberals. And a victory against the IRS can never be a bad thing.

  • Hyperion||

    I'm ordering mine now:

    Hiding from the Emporer

  • Hyperion||

    Emperor, GDit, no edit feature!

  • GlenchristLaw||

    "The IRS can appeal this ruling to the U.S. Court of Appeals for the District of Columbia Circuit."

    Or they can just ask Congress to give them the authority -- which of course it will.

  • LTC(ret) John||

    I think there are more votes/numbers on the "Mom and Pop" side than Big Tax Prep's.

  • Ken Shultz||

    "The court enjoined the IRS from enforcing its new licensing scheme for tax preparers, which was poised to put tens of thousands of tax preparers out of business. ..."

    Congratulations to the Institute for Justice.

    Now if we could get rid of the income tax entirely and, thus, put all those tax preparers out of business legitimately by making them obsolete, that would be great.

  • Archduke Pantsfan||

    Good grief:

    CNN "journalist" has been writing letters to Obama every day of his first term

    Inauguration Day will signal the culmination of an effort I launched on January 20, 2009, to write a letter to the White House every single day of Barack Obama’s first term.

    And I do mean every day. Weekends, holidays, when he was on vacation, and when I was on vacation. I wrote in my office, at home, in moving airplanes, cars, trains and even while running through the woods. I wrote early in the morning, in the middle of the day and late at night.
  • Tulpa (LAOL-PA)||

    How do you write a letter while running through the woods?

  • Sevo||

    From the link:
    "I did not intend to get in this deep."
    A cry for HELP!

  • Tulpa (LAOL-PA)||

    School Tells Mother To Get Daughter Breast Reduction After Harassment

    Jackson called the Riverview Gardens School District to complain and was shocked by what she was told.

    “It makes me feel like now you are telling me it’s my fault, it’s God’s fault the way he made her. The lady on the phone said they could transfer my daughter and said her boobs were so large she will always get teased. And the only suggestion she had for me is to have my daughter get a breast reduction,” said Jackson.

    No pictures, sorry.

  • Xenocles||

    I have a second opinion ready for them.

  • Sevo||

    Dunno who to thank here, or even if thanks are indicated:
    "TSA to remove controversial X-ray scanners"
    "Those airport scanners with their all-too revealing body images will soon be going away."
    Gov't agency responds to citizens' gripes? Flying unicorns boarding at gate 73?

  • Ken Shultz||

    I guess the grave emergency that required them in the first place has been cancelled.

  • Paul.||

    Damnit. If you're not first, you're last...

    Well played, sir. Well played.

  • Archduke Pantsfan||

    To be fair it was in the PM links

  • Sevo||

    Looked and didn't see it. Ah, well.

  • Tulpa (LAOL-PA)||

    Not content with shooting dogs, PGH area cops put a swan in jail.

  • Archduke Pantsfan||


  • Paul.||

    Blatently OT:

    TSA to remove controversial X-ray scanners

    Those airport scanners with their all-too revealing body images will soon be going away.

    Those airport scanners with their all-too revealing body images will soon be going away.

    The Transportation Security Administration says the scanners that used a low-dose X-ray will be gone by June because the company that makes them can't fix the privacy issues.

    And yet Bob assured us everyting was A-Ok.

  • Sevo||

    Too late; see 10:29PM above

  • mad libertarian guy||

    It's not the company that "can't fix the privacy issues." The machine isn't the problem, just a symptom.

  • Archduke Pantsfan||

    This cyclist hates motorists and puts in on the Youtube

  • Paul.||

    In less than two months, she’s cycled into four aggravated exchanges with motorists as she jockeys for space on Toronto’s busy streets.

    Idlewild, an urban planning graduate and freelance writer, is part of a growing cohort of Toronto cyclists who record their urban rides with clip-on video cameras. And in her case, she’s posting footage of her daily jaunts — confrontations and all — on YouTube and a Tumblr account.

    I'm coming to the slow, painful conclusion that there's nothing more insufferable on this earth than a "cycling activist".

  • mad libertarian guy||

    Yes there is. A cycling activist who in school to become an "urban planner."

  • VG Zaytsev||

    She's probably a vegan too.

  • LTC(ret) John||

    "Idlewild, an urban planning graduate"

    Slaver in training?

  • JeremyR||

    Hey, Kurt Loder is on RedEye. You should have mentioned it.

    Okay, he never actually says anything, just a soft chuckle now and then.

  • waaminn||

    Sounds straight up legit to me dude.

  • New Cassandra||

    How about consumer protection? The IRS just wants the people who you PAY to prepare your tax return to not be incompetent idiots.

  • Tulpa (LAOL-PA)||

    Does this principle apply to other people you PAY as well? Should the govt require that waiters and waitresses pass college level courses to make sure they can remember your order and carry the tray properly?

  • New Cassandra||

    If the waiter or waitress fucks up your order is is easily fixed, or in the worst case will only cost you a few bucks.

    If a tax preparer fucks up your taxes it can cost you many thousands of bucks, plus possible jail time.

  • EDG reppin' LBC||

    Derp. Derp derpitty der derp derp.

  • New Cassandra||

    Brilliant comeback. - I can see why Libertarians are so sucessful in political debates.

  • RPR2||

    licensing doesn't in any way prevent incompetent fuckups. for example, teachers.

  • Kate V||

    THANK YOU Cassandra!

  • The Late P Brooks||

    I just want the people who write the rules to not be incompetent idiots.

  • The Late P Brooks||

    there's nothing more insufferable on this earth than a "cycling activist".

    And now that tubby smiley bitch from H&R Block is on my teevee, talking about how Obamacare has affected my taxes, and I had better come pay her to figure it all out for me. "900 pages, tee hee hee!"

    Fuck you, chubby.

  • Kate V||

    NO, it is NOT too late for preparers to get their CE's for 2012. The IRS granted an extension, so one can renew their PTIN still for 2012, right NOW, and this year instead of earning 15 credits one would need 30, if they didn't complete theirs in 2012.

    It's a non-issue anyway.


    Nice, way to go! Our tax preparation services in Fort Walton Beach FL almost went toe to toe with the IRS a couple of years ago, but I think they reached a resolution without conflict. They're still around, at least!


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