As we reported yesterday, the IRS preparer-regulation power grab failed in the D.C. Court of Appeals. The three-judge panel unanimously ruled that “The IRS may not unilaterally expand its authority through such an expansive, atextual, and ahistorical reading” of the law.
One grumpy IRS person told us that we would regret it, that Congress will pass a worse IRS-run preparer regulation regime. While it’s possible, I don’t think Congress is in any mood to give the IRS more power right now (see TaxProf, The IRS Scandal, Day 279).
It’s a victory for taxpayers, for preparers, and for the rule of law. One hope it is a good omen for future court decisions on the on-the-fly rewrites of the Obamacare effective dates.
My endzone dance is here. The Tax Prof has a roundup of coverage, as well as a guest op-ed: Johnson: The D.C. Circuit Rejects the IRS’s Regulation of Tax Return Preparers, which says “At bottom, Loving stands for the proposition that exigency does not excuse illegality.”
Other tax bloggers weigh in:
Russ Fox, DC Court of Appeals Rules Against IRS: Loving Decision Upheld. ”The real problem is the huge complexity of the Tax Code, and the biggest villain here is Congress. Rather than regulating tax professionals, we need to regulate (gut) the Tax Code itself.”
Leslie Book, Initial Reactions to the Government’s Loss in Loving (Procedurally Taxing): ”The government may seek to get Supreme Court review of the matter, or may work with Congress to get specific legislative authority. I offer no views on the odds of the government seeking cert, but its sound beating in two opinions leaves the possibility of obtaining cert and a victory in the Supreme Court seemingly small.”
Joseph Henchman, Big Win for Taxpayers: IRS Loses Effort to Expand Power Over Tax Preparers (Tax Policy Blog). ”In May 2013, we filed a brief opposing an IRS appeal of a court decision striking down their regulation of small tax preparers.” That’s the brief I joined, along with fellow tax bloggers Russ Fox and Jason Dinesen.
Trish McIntire, The IRS Lost! “I don’t know if there can be any more appeals (not a lawyer) but I bet there will be a tax preparer bill in Congress soon.”
Paul Neiffer, When Farmers Barter. While bartering is taxable, Paul muses: “Some of these barter transactions are properly reported, however, my educated guess is that much higher percentage is not.”
William Perez, How to Handle Owing the IRS
Tony Nitti, Tax Geek Tuesday: Allocation of Partnership Liabilities ”Admit it. Nobody really understands what’s going on in this remote corner of the K-1; typically, most tax preparers just apply the tried-and-true “same as last year” approach to allocating liabilities, and trust that it won’t matter in the end.” Oh, it does, it does.
Jana Luttenegger, “Extensive Wait Times” Ahead with the IRS (Davis Brown Tax Law Blog). And it’s not like they were brief before.
Kay Bell, The pros and cons of tax refunds. While logically you don’t want to let the taxman sit on your money, clients always seem happiest with a fat refund. That leads many tax advisors to sandbag a bit on payments.
Tax Trials, The Tax Education of Lauryn Hill
Annette Nellen links to the Video of IRS Commissioner Koskinan on the filing season.
The Iowa Department of Revenue has a Facebook page! It’s a good idea, and they actually answer questions, like this:
It’s great that they are answering disgruntled taxpayers for everyone to see. Best thing is that it’s available to anybody, not just Facebookers. You don’t have to bring yourself to “like” the Department of Revenue to read it.
David Brunori, Tax Breaks for Lawyers — No Joke (Tax Analysts Blog):
I read recently in the Kansas City Business Journal that Missouri gave a big law firm $2.8 million in tax incentives to move to Kansas City. I thought there must be some kind of mistake. Certainly, no politician would agree to give citizens’ hard-earned money to lawyers. And certainly, they would not give citizen money to big-firm, wealthy lawyers. But once again, reality trumps good tax policy. The Missouri Department of Economic Development gave the nearly $3 million to attract the international law firm Sedgwick LLP to downtown Kansas City.
Must be a rough neighborhood if that’s considered an improvement. Or, more likely, Missouri has completely lost its mind.
Tax Justice Blog, The States Taking on Real Tax Reform in 2014. One blog’s “real tax reform” is another blog’s march to madness.
News from the Profession: Big 4 Dude Says Dudes at His Firm Rewarded For Treating Non-Dudes Like Dudes (Going Concern)
Today is Abraham Lincoln’s birthday. He was born 205 years ago today in Kentucky, before anybody thought of an income tax. His presidency saw the first U.S. federal income tax, passed to finance the Civil War. The Revenue Act of 1861, Section 49, imposed a flat 3% levy “upon the annual income of every person residing in the United States, whether such income is derived from any kind of property, or from any profession, trade, employment, or vocation carried on in the United States or elsewhere, or from any other source whatever” over $800. It was replaced by a progressive levy in 1862, with a 3% rote on income over $600, with a 5% rate kicking in at $10,000.
The tax expired under its own terms in 1866, after Lincoln’s death. Lincoln never came back, but the income tax returned to stay in March 1913.