The Internal Revenue Service said it is now allowing some suspended or disbarred tax practitioners to obtain or renew preparer tax identification numbers and prepare federal tax returns for compensation as a result of recent court decisions in the Loving v. IRS case.
The change applies to individuals who were sanctioned (suspended or disbarred, with their PTIN access blocked). In a decision issued in February, in the case of Sabina Loving, et al. v. Internal Revenue Service, et al., the U.S. Court of Appeals for the District of Columbia Circuit sustained a federal district court decision and injunction against the IRS prohibiting it from administering regulations requiring tax preparers to pass a competency tests and complete annual continuing education before obtaining or renewing PTINs.
Both courts concluded that tax return preparation does not constitute representation within the meaning of the statute relied on by the IRS to authorize the regulatory actions that were struck down. The Circuit Court’s decision became final on May 12, 2014. The IRS said last week that neither the injunction nor the court decisions affect or apply to the PTIN requirements, which are based on separate statutory authority. In light of the decisions and the injunction, the IRS Office of Professional Responsibility has determined that a suspension or disbarment from practice before the IRS may not include a restriction on return preparation for compensation, and that access to the PTIN required for such services may no longer be blocked based on discipline under Circular 230.
The OPR has sent letters to the individuals who currently are suspended or disbarred from practice before the IRS as a result of OPR disciplinary action, informing them of their change in status. The IRS said that any individual who has been suspended or disbarred in a Circular 230 proceeding who does not receive the notice may determine their status with respect to PTIN eligibility by calling the main OPR number, (202) 317-6897.
However, the IRS noted that individuals who have been enjoined by a court from tax return preparation are not affected by this action. In addition, individuals under suspension or disbarment will not be entitled to represent their clients before the IRS for any purpose during their disciplinary period.