Court upholds validity of IRS Annual Filing Season Program

By NSA Blogger posted 08-14-2018 01:10 PM


The US Court of Appeals for the DC Circuit today upheld the IRS Annual Filing Season Program, finding that the IRS had the legislative authority to develop and implement the Program under existing statute.

The challenge to the Program was brought by the AICPA, which argued that the AFSP should be invalidated for two reasons:  it violates this same Courts opinion in the Loving case and also that the Program, which is implemented by means of a Revenue Procedure, is invalid because it was not subject to a notice and comment period as required by law.

In its opinion, the Court noted that, “Consistent with its authority under § 330(a), and contrary to the AICPA’s argument, the IRS uses the education, testing, and certification portions of the Program to ensure the unenrolled preparers who participate demonstrate the qualifications and competence necessary to practice before the agency.”  The Court then found that “practice before the agency” is separate and apart from tax return preparation.  As a consequence, the Court held that, “We see nothing in the Program that attempts to resurrect regulations of the type enjoined in the Loving decisions.”

With respect to the procedural notice and comment requirements, the Court noted that the participants in the AFSP are afforded limited practice rights before the IRS.  It found that, “as the AICPA points out, the limited practice afforded unenrolled preparers before 2011 was the product of Revenue Procedure 81-38, which – like Revenue Procedure 2014-42 – was issued without notice and comment.”  The opinion held that the IRS did not violate the law by failing to follow notice and comment procedural requirements.

The Court concluded that “the IRS prevails on the merits of the case. Accordingly, we remand the case to the district court for the purpose of entering judgment for the IRS.”

Congratulations to those NSA members, including ACAT credential holders, who decided to voluntarily participate in the AFSP and earn limited practice rights before the IRS.

The court's opinion can be read here.



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