Practitioners Suspended or Disbarred from Practice Before the IRS Can Prepare Tax Returns

The IRS has decided that, as a result of the recent decision preventing it from regulating unenrolled tax return preparers, disbarment or suspension from practice before the IRS cannot include a ban on tax return preparation or blocking an individual’s preparer tax identification number (PTIN). Therefore, the Service announced that certain tax return preparers who were sanctioned by having their PTINs blocked between Aug. 2, 2011, and Feb. 11, 2014, can obtain or renew their PTINs and prepare tax returns.

The IRS explained that this action was a response to the decision in Loving, No. 13-5061 (D.C. Cir. 2/11/14), in which the D.C. appeals court upheld a district court’s decision and injunction prohibiting the IRS “from administering regulations requiring return preparers to pass a competency [test] and complete annual continuing education before obtaining or renewing PTINs.” According to the IRS, both courts determined that tax return preparation does not in and of itself constitute representation before the IRS.

As a result, the IRS Office of Professional Responsibility (OPR) has determined that suspension or disbarment from practice before the IRS based on discipline under Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10), may not include a restriction on return preparation for compensation or access to the PTINs needed to provide return preparation.

OPR has sent notices to individuals affected by this action. Anyone who does not receive a notice may determine his or her status by calling 202-317-6897, the main OPR number. This action does not apply to practitioners who have been enjoined by court orders.