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IRS asks for stay on PTIN fees

By Alistair M. Nevius, J.D.

Please note: This item is from our archives and was published in 2017. It is provided for historical reference. The content may be out of date and links may no longer function.

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Editor: Sally P. Schreiber, J.D.

Taxpayers and the government will be irreparably harmed if the IRS is not allowed to charge a user fee for preparer tax identification numbers (PTINs), the IRS argued in court documents filed July 24. The IRS also moved that the U.S. District Court for the District of Columbia stay its injunction prohibiting the IRS from charging PTIN fees.

In June, the court ordered the IRS to stop charging a user fee for issuing or renewing PTINs but allowed it to continue requiring paid tax return preparers to use PTINs (Steele, No. 14-cv-1523-RCL (D.D.C. 6/1/17)). The court also ordered the IRS to refund PTIN fees paid since 2010.

In its memorandum in support of its motion, the IRS asked for the injunction to be stayed while the IRS decides whether to appeal the court’s decision and, if it does appeal, during the appeal process. The IRS argued that if it appeals the decision and wins, but is not allowed to collect PTIN fees during the appeal, it will have no way to then collect the “likely tens of millions of dollars” of PTIN fees it would have collected during that time. It also argued that it will have to divert money from other programs to fund the PTIN program, which would hurt its ability to provide other taxpayer services.

On the other hand, the IRS argued, if the stay is granted and the IRS loses on appeal, it can simply refund the fees it collected during the appeal.

The IRS argued that it is likely to win on appeal, noting that the D.C. District Court’s holding conflicts with decisions from the Eleventh Circuit and the Northern District of Georgia (Brannen, 682 F.3d 1316 (11th Cir. 2012), aff’g No. 4:11-CV-0135 (N.D. Ga. 8/26/11); Buckley, No. 1:13-CV-1701 (N.D. Ga. 12/4/13)). The IRS also argued that the district court’s decision that a PTIN is not a “service or thing of value” under 31 U.S.C. Section 9701 is unsupported by the statute and regulations.

On Aug. 7, the plaintiffs filed their opposition to the defendant’s motion for stay pending appeal, objecting that the IRS’s motion for a stay was both too late because it took 53 days from the court’s decision to seek a stay and too early because the IRS had not filed an appeal in the case.