American Institute of Certified Public Accountants v. IRS, (CA DC 10/30/2015) 116 AFTR 2d ¶ 2015-5377

The Court of Appeals for the District Columbia, reversing a district court’s holding, has held that the American Institute of Certified Public Accountants (AICPA) has standing to challenge IRS’s Annual Filing Season Program (AFSP), i.e., the program under which unenrolled return preparers are listed in an IRS directory of return preparers and can represent taxpayers that are under IRS examination.

Background—the AFSP.In IR 2014-75 (see Weekly Alert ¶  33  07/03/2014), IRS announced a voluntary education program, the AFSP, for unenrolled return preparers that would go into effect for the upcoming filing season. It also announced that it would publish a directory of preparers that would include persons who completed the program including persons with recognized credentials.

In Rev Proc 2014-42, 2014-29 IRB 192 (see Weekly Alert ¶  26  07/03/2014), IRS provided more detailed procedures on the AFSP and explained how it was designed to encourage tax return preparers who are not attorneys, CPAs, or enrolled agents (EAs) to complete CE courses for the purpose of increasing their knowledge of the law relevant to federal tax returns.

Attorneys, CPAs and EAs have unlimited representation rights and can represent clients before any IRS office, regardless of participation in the AFSP. Other return preparers have limited representation rights before limited IRS offices with respect to clients whose return they prepared for calendar year 2015 and for earlier years. However, beginning with returns for calendar year 2016, only AFSP participants who obtain a Record of Completion will have those limited representation rights before IRS for clients whose returns they prepared and signed. (Fact Sheet 2014-8, June 2014; Weekly Alert ¶  29  07/10/2014)

In IR 2015-22 (Weekly Alert ¶  20  02/12/2015), IRS announced that it launched the directory of preparers.

Background—standing.Standing is a party’s right to make a legal claim. It is also sometimes referred to as “standing to sue.”

Facts.In 2014, the AICPA brought suit against IRS claiming that IRS lacks statutory authority to implement the AFSP, acted arbitrarily and capriciously in adopting it, and failed to engage in required notice and comment rulemaking.

District court found that AICPA did not have standing.In American Institute of Certified Public Accountants v. IRS, (DC DC 2014) WL 5585334,a district court held that the AICPA did not have standing for its suit.

Circuit court reverses; AICPA has standing.The Circuit Court for the District of Columbia has now held that the AICPA has standing and that therefore its case can proceed. Specifically, the Court said that the AICPA has “competitor standing,” i.e., that it showed that the AFSP would result in an actual or imminent increase in competition that would likely cause an injury to AICPA members.

RIA observation:The Circuit Court did not in any way address the merits of the AICPA’s claims that IRS lacks statutory authority to implement the AFSP, etc. This case only involved whether the AICPA had standing for its case to be heard by a federal court. The merits of the case will be heard, in the future, by the District of Columbia district court.

References:For IRS’s Annual Filing Season Program, see FTC 2d/FIN ¶  T-10907.1  ; TaxDesk ¶  821,021.1  ; TG ¶  70010  .

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