A lawsuit over the Internal Revenue Service’s fees for Preparer Tax Identification Numbers has received class-action status, according to an attorney who has been trying to eliminate or reduce the PTIN fee for over four years.
However, the court did not go so far as the plaintiffs would like in allowing refunds of PTIN fees already paid by tax preparers.
“The ruling of about a week ago, as I interpret it, basically granted class-action status to potentially receiving an injunction to stop all the fees going forward, but it did not cover getting a refund of the money that has already been paid,” said Allen Buckley, an attorney in Atlanta. “On Tuesday my co-counsel and I filed a motion for reconsideration with a brief saying we want class-action status for the whole case, including getting the money that has already been paid, not just for an injunction to stop them from charging fees in the future.”
He noted that the court invited him to submit a new brief on the refund issue. “It invited submission on that matter because we hadn’t briefed it when we filed the motion for class certification and the related brief,” said Buckley. “We had just sought class certification. We didn’t really delve into that issue. My co-counsel and I personally feel there’s a good chance the court will grant full class-action status for the whole case, but time will tell. It’s up to the court obviously.”
“The Court will deny plaintiffs’ motion for certification as it relates to their request for restitution,” wrote U.S. District Judge Royce C. Lamberth in a memorandum opinion on February 9. “This ruling is subject to reconsideration, if needed, after the parties more fully brief issues relating to subject matter jurisdiction.”
Buckley has had some setbacks over the years with the effort to eliminate PTIN fees. In June 2012, an appeals court upheld a lower court ruling dismissing the complaint of Georgia tax attorney and CPA Jesse Brannen III, who was represented by Buckley (see Appeals Court Upholds PTIN Fee). In December 2013, another federal court also dismissed the case (see Court Reconfirms PTIN Fees).
However, Buckley filed a separate suit in 2014 in Washington, D.C., on behalf of two other CPAs, Adam Steele of Minnesota and Brittany Montrois of Georgia (see CPAs Sue IRS over PTIN Fees). Joseph Henchman, a vice president at the Tax Foundation in Washington, D.C., was later added as a plaintiff. That lawsuit is the one that was granted class-action status this week.
They are challenging the IRS’s PTIN fee, arguing in part that the PTIN does not represent or confer a “service or thing of value,” so the IRS is not permitted to impose any fee at all for the ID number. Alternatively, they argue that even if the IRS is authorized to impose a PTIN fee, the amount it charges is excessive. Therefore, they are seeking a judgment declaring that either the IRS lacks the authority to charge a PTIN fee or that the fee it charges is excessive. They are also seeking restitution or return of the PTIN fees charged by the IRS, or alternatively just the fees collected that exceed the amount authorized by law.
The IRS and the Treasury Department have been requiring paid tax return preparers to obtain and pay for a PTIN since Sept. 30, 2010, arguing that federal law permits agencies to issue regulations to establish a charge for a “service or thing of value” provided by the agency.
In the 2013 case of Loving v. IRS, a federal court ruled that the IRS exceeded its statutory authority in requiring continuing education and testing of tax preparers, but it upheld the IRS’s authority to require registration of tax preparers, so the PTIN has remained in effect. The initial fee used to be $64.25 ($50 for the IRS and $14.25 for the third-party vendor who administers the application and renewal process), and an annual renewal fee of $63. However, last October, the IRS lowered the application and renewal fee to $33 per year, plus $17 paid to the third-party vendor for both new applications and renewals.