A few years ago, the IRS decided it needed to regulate tax preparers.  After all, too many of these folks are fly-by-night cheats, others create fraudulent returns, and most of them fail to stay up-to-date with IRS regulations and tax laws.

Except there was a lawsuit imposed against the IRS when it developed standards- with an annual fee- to obtain what’s called a PTIN (preparer tax identification number).  Instead of listing our SSN (social security number) on a client’s tax return (which exposes us to all sorts of identification theft), we now use a completely different number. From 1999 through 2010, the year that the new standards were developed, PTIN’s were free- and optional.  After the standards were introduced, the IRS charged us $ 63 a year for annual registration.  (Thankfully, they reduced the fees [for those of us who have qualified via examination and proficiency] for Enrolled Agent status, so we didn’t get double-billed for registration.)

While Loving v.  IRS (742 F.3d 1013 ]DC Circuit 2014]) struck down the requirements to license all tax preparers, the PTIN rules (and now smaller fees) stuck around.

Not surprising, a “class action” lawsuit was filed to render the IRS unable to impose a fee for the PTIN.  The suit claimed that the IRS could neither mandate the use of PTIN nor were they able to impose a fee for said PTIN.  (Even if the IRS had the right to charge a fee, the suit alleged that the fee imposed was excessive.)

When the courts stipulated that the IRS could require PTIN registration for every tax preparer in 2017, Judge RC Lamberth claimed that the PTIN did not merit any fees.  (He claimed that it only served to let the IRS identify and track tax preparers and the forms they submitted.  He also held that the IRS had no legal authority to impose a licensing scheme.  And, barred the IRS from collecting any fees.  Oh, yeah- they also needed to refund those fees, which provided a pool of cash totaling some $ 175 million.)

I bet you guessed that the IRS appealed.  You win the prize.

The case, heard on 11 May 2018, has finally been adjudicated.  The fees ARE legal.  Judge Lamberth’s opinion was overturned. (The value is what I wrote above- it keeps my social security number private and that has real value.)  Moreover, the IRS has to spend money and time to maintain that database. (Montrois, No. 17-5204 (D.C. Cir. 3/1/19))  However, this finding left it up to the district court to determine what fee would be appropriate.

So, no refunds.  And, for those folks who are not Enrolled Agents, there will be fees- and accountability when you prepare someone’s taxes.

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