The IRS recently lost a class action lawsuit on how they manage and charge for the Preparer Tax Identification Number (PTIN) program. The IRS PTIN program was updated to include an annual renewal and annual renewal fees several years ago. This was ostensibly to combat tax preparer fraud, yet the IRS was never quite able to articulate how it combated fraud and how much fraud it prevented. The 2014 Loving case is a related case in which the IRS lost the ability to regulate tax preparers.
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The IRS Office of Professional Responsibility lost a court case against disbarred attorney, James Sexton, Jr. that tried to regulate Sexton’s preparation of tax returns and offering services of written advice. The court issed a declatory judgment, rejecting the IRS Office of Professional Repsonsibility motion for summary judgment. Furthermore, the court issued a permanent injunction against the IRS Office of Professional Responsibility from pursing further enforcement against Sexton in this matter. Sexton successfully argued that the Loving case applied to his situation because, as a disbarred attorney, the IRS Office of Professional Responsibility did not have jurisdiction over him. He was not representing clients before the IRS because, as the Loving case determined some years earlier, preparing tax returns does not constitute practice before the IRS and the IRS cannot regulate those who do not practice before the IRS.