Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
IRS Relies on Rule from 1800s to Justify Tax Preparer Regulations
Author: Scarinci Hollenbeck, LLC
Date: October 9, 2013
Key Contacts
Back
The Internal Revenue Service is pulling out all the stops to support a set of proposed rules that would allow it to better regulate tax preparers, as evidenced by its use of a long-forgotten law from the 1800s to justify its argument.
At an appellate court hearing challenging the IRS tax law, Justice Department representative Gilbert Rothenberg cited the “Horse Act of 1884” as a governing piece of legislation that authorizes the IRS to regulate thousands of independent tax preparers, according to Reuters. Rothenberg explained that in the years following the Civil War, many Americans submitted war loss claims to the government for lost or missing horses. This led to the emergence of unregulated agents who would represent and lobby for these individuals for a fee. Over time, many agents began inflating both claim values and fees, which led to the government passing legislation to regulate intermediaries, Rothenberg concluded.
He explained that this scenario largely mirrors what could occur in present time if tax preparers are permitted to work without government oversight or be required to to pass a competency test and take annual continuing education classes. However, the Institute for Justice, which opposes the IRS law, argued that “representatives” and “service providers” do not fall under the same classification, and that tax preparers merely provide a paid service to clients.
“Preparing a tax return is not a representative act,” said Dan Alban, a representative for the institute, according to Reuters. “It is performing a service, certainly, but there’s no representation.”
The three appellate judges hearing the case seemed to agree, and peppered Rothenberg with questions about the scope and history of this law, according to Politico. However, the court is not expected to reach a ruling for some time, as arguments over whether independent tax preparers should face stricter regulations will continue for the next several months.
- Practices: Tax and Trusts & Estates
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
New Jersey’s Next Manufacturing Tax Credit: Stability Secured, Timing Matters
A Settled Regulatory Environment Enables Confident Capital Planning New Jersey’s new manufacturing incentive program, Next New Jersey Manufacturing Program, enters 2026 with something uncommon in economic development these days: policy stability. The statute is enacted, New Jersey Economic Development Authority’s (“NJEDA”) rules are adopted, and the application portal is open. With the election outcome settled, […]
Author: Michael J. Sheppeard
A Simple Guide to Industry Roll-Up Acquisitions
When done successfully, industry roll-up acquisitions can dramatically grow and strengthen your business. In this post, we break down what an industry roll-up is, why companies pursue it, and what makes it an effective (and sometimes risky) business strategy. What Is an Industry Roll-Up Acquisition? In an industry roll-up acquisition of companies, a buyer acquires multiple companies […]
Author: Dan Brecher
Genesis Mission: How the U.S. Government’s New AI Platform Will Reshape Corporate Innovation, Risk, and Competition
The federal government has launched one of the most ambitious scientific initiatives in decades, and it will redefine how companies develop technology, manage risk, and compete. The Genesis Mission, created by Executive Order and driven by the Department of Energy (“DOE”), is intended to accelerate scientific discovery through a national AI platform that links supercomputers, […]
Author: Michael J. Sheppeard
Stablecoins and the GENIUS Act: How New Global Rules Are Reshaping Compliance
Stablecoins Leave the Grey Zone Stablecoins were supposed to be the “boring” part of crypto: digital dollars that just work. Yet for years they have lived in a regulatory no-man’s-land, classified one day as securities, the next as commodities, and sometimes as something regulators had not even named yet. That uncertainty is finally starting to […]
Author: Bryce S. Robins
Don’t Overlook the Importance of Business License Management
If you operate a business without the proper license, you risk fines, insurance issues, reputational harm, and even business closure. Even innocent mistakes, like forgetting to renew a license, can have significant consequences, such as losing your lawsuit for payment of services that are unlicensed, which makes it imperative to have business license management procedures […]
Author: Dan Brecher
Failing to Comply With NJ Rent Control Exemption May Prove Costly
What Developers Need to Know About New Jersey’s Rent Control Exemption Law to Ensure Entitlement to Exemption for Newly Constructed Multi-family Housing. A property owner in Jersey City is facing a $400 million federal class action lawsuit alleging that the landlord did not follow the procedural steps required to be eligible for exemption from local […]
Author: Patrick T. Conlon
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.