In the October 2013 issue of Tax Notes, former IRS Commissioner Lawrence B. Gibbs argues that the District Court erred when it ruled in Loving v. IRS that the Treasury had no authority to regulate currently unregulated commercial preparers.  The article, which originated as a presentation at Villanova’s Annual Law Review Symposium, makes the following points:

• The language and history of the statutes authorizing Circular 230 regulations make it difficult to believe that Congress intended to authorize the Treasury to regulate tax professionals who interact with the IRS regarding returns that have already been filed, but not the tax professionals that prepare those returns.
• Tax preparation is indeed “representation” and that a tax professional preparing a return is analogous to an attorney preparing a will, both clearly representational activities. People could do it themselves, but they often engage a professional to advise, assist and prepare the documents.
• That since Plaintiffs and Defendants have each presented differing interpretations of the key statutory phrase of section 330(a), “the practice of representatives of persons before the Department of the Treasury,”  the phrase should be considered “ambiguous.” Therefore the federal court must accept the IRS’s interpretation as correct under the precedent for determining whether to grant deference to a government agency’s interpretation of a statute set forth by “Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc”

The full Tax Notes is available in the documents links section below. It has been filed with the U.S. Court of Appeals for the District of Columbia Circuit by Appellants under Federal Rules of Appellate Procedure, Rule 28j.

Document Links

• Appellants’ filing letter (IRS et. al.)
• Tax Notes article
• Appellees’ response letter (Sabina Loving et. al.)