Court Told the IRS Inflates Cost of Ending Licensing Scheme

By 2,000 percent


Tax season opens today, and three independent tax preparers represented by the Institute for Justice (IJ) have filed a response in federal court to the IRS's last-ditch attempt to impose an unlawful licensing scheme on tax preparers.  The agency asked the court to lift an injunction entered against it on January 18 after it lost in federal court, claiming that it would suffer a variety of unsupported and implausible harms if the court did not suspend its ruling.  IJ's brief, filed late yesterday, audits the IRS's claims of "irreparable harm," finding that the agency exaggerated its claim of financial harm by 2,000 percent and consistently exaggerated and inflated other figures.

On January 18, 2013, a federal judge struck down the IRS's scheme to license tax preparers, saying the agency had never been given authority by Congress.  The ruling came from a lawsuit, Loving v. IRS, filed by IJ and three independent tax preparers.  The IRS responded to the judge's ruling with a motion making several misleading claims and unsettling arguments, including inflating the monetary cost of the ruling to the agency by over 2,000 percent and arguing that the IRS's licensing scheme is a cash cow the agency must be permitted to milk for all it is worth.