A law firm representing a trio of independent tax preparers has filed a strongly worded response to the Internal Revenue Service’s motion for a stay on a judge’s ruling that invalidated the IRS’s testing and continuing education requirements for tax preparers.

In January, a federal judge in Washington, D.C., ruled that the IRS lacked the statutory authority to impose its Registered Tax Return Preparer regime after the tax preparers filed suit challenging the requirements (see Court Rules IRS Doesn’t Have the Authority to Regulate Tax Preparers). The three independent tax preparers—Sabina Loving of Chicago, John Gambino of Hoboken, N.J., and Elmer Kilian of Eagle, Wis.—were represented by the Institute for Justice, a libertarian law firm in Arlington, Va.

The IRS then announced its intention to appeal the ruling in the case, known as Loving v. IRS, and asked the judge, James E. Boasberg, to suspend his original ruling, arguing that it would disrupt tax season (see IRS to Appeal Ruling Barring Licensing of Tax Preparers).

Boasberg denied the IRS’s request, but clarified the ruling on February 1, enabling the IRS to re-open its Preparer Tax Identification Number, or PTIN, online registration system for tax preparers. The judge also clarified that tax preparers could take competency tests and continuing education courses on a voluntary basis, but they would not be required to do so while his injunction remained in place (see Court Modifies Ruling Invalidating Tax Preparer Regulations).

Last month, the IRS filed notices of appeal in both the district court and the D.C. Circuit Court of Appeals announcing its intention to appeal the earlier rulings, and then filed a Motion for Stay Pending Appeal in the D.C. Circuit Court, similar to the motion for a stay that it filed in the district court that Judge Boasberg had denied on February 1.

The tax preparers filed a vigorous response Friday to the IRS’s motion for a stay pending appeal.

“The sky is (still) not falling,” said the brief. “Despite the sensationalist, everything-but-the-kitchen-sink claims of harm by Defendant-Appellants (“the IRS”), nothing justifies extraordinary relief in this case. Notably, the IRS fails to allege any imminent, irreparable harm. This tax season is unaffected because the IRS had already postponed its deadlines to the end of this year two weeks before the injunction issued.”

In the filing, the preparers praised the district court judge for exercising “sound discretion” in declining to grant the IRS a stay pending appeal, “an extraordinary remedy which is rarely granted, and for which this Circuit follows a strict standard for a showing of irreparable harm.”

Judge Boasberg had noted that “the Court is not requiring the IRS to dismantle its entire scheme,” and made clear that the IRS is not required to shut down any facilities or lay off any staff, and could continue to operate the Registered Tax Return Preparer program as a voluntary certification program. The court also clarified that the separate PTIN requirement, which the plaintiffs did not challenge, was unaffected by the injunction against the RTRP licensing scheme.

“If the IRS prevails on appeal, the worst-case scenario it alleges is that it would have to delay implementing the RTRP regulations by just one additional tax season,” said the brief. “Given that tax preparers have been unlicensed by the IRS for the 100-year history of the income tax, this is decidedly not imminent and irreparable harm.”

Dan Alban, lead attorney on the case at the Institute for Justice, pointed out that the IRS has failed to allege any imminent or irreparable harm. “They’re talking about a program which, even under a worst case scenario that they allege, would just be delayed by one year,” he said in an interview Friday. “They’ve already taken three or four years to roll out this program in the first place. There hadn’t previously been, for the last 100 years, licensing of tax preparers, so it just doesn’t seem like a plausible claim of irreparable harm. On top of that, there’s nothing really all that imminent. They’re not suggesting they would immediately put the regulations back in place in order to do something this tax season. They, in fact, already suspended the continuing education requirements on January 3, two weeks before the judge ruled in this case, so there were no RTRP regulations actively in effect when the judge ruled. The primary claim of harm they’ve come up with is, in 2014 they will have to delay implementation of the program. But when you file a motion for a stay, it’s a motion for extraordinary relief. They’re saying, ‘There’s a clear and present danger we’re going to suffer immediate and irreparable harm,’ and they simply don’t meet that standard.”

Alban pointed out that the standard of review for the appeals court would be high, and the IRS would have a big hurdle to overcome. “The appellate court doesn’t just start afresh,” he said. “It looks at what the district court has already done. In this case, it reviews a grant or a denial of a motion for a stay on what’s called ‘abuse of discretion.’ The trial court has to have acted pretty badly, has to have really abused the authority a judge has to exercise discretion, in order for the appeals court to overturn them. The standard here is pretty high. The IRS doesn’t really allege any abuse of discretion. They argue that the judge was wrong, but the standard isn’t ‘can you find some way to disagree with the judge?’ The standard is ‘did the district court judge abuse his discretion and fail to act in an equitable manner?’ The opinion he issued on February 1 was a very balanced and measured opinion. It offered a compromise to the IRS, letting them know the PTIN regulations weren’t affected, that they could continue operating the RTRP program on a voluntary basis. They didn’t have to lay anyone off. They didn’t have to close any facilities. That’s pretty much the opposite of abuse of discretion. That’s a very measured approach to things. We don’t think the IRS made a case that the district court judge abused his discretion because he didn’t.”