How the IRS Can Regulate Return Preparers Without New Law

15 Pages Posted: 7 Oct 2015 Last revised: 8 Oct 2015

See all articles by Bryan Camp

Bryan Camp

Texas Tech University School of Law

Date Written: September 21, 2015


Treasury has historically regulated a group called “tax practitioners” (chiefly lawyers, CPA’s, and enrolled agents) through the regulations contained in Circular 230. These regulations are issued under the authority of 31 U.S.C. §330 which permits Treasury to regulate “the practice of representatives of taxpayers before the Department.”

In 2011, Treasury tried to extend Circular 230 to cover Unenrolled Return Preparers (URPs). In the 2013 case of Loving v. IRS, the D.C. Circuit held that extension invalid based on 2 rationales: (1) URPs were not "representatives" of taxpayers, and (2) tax return preparation was not "the practice" of tax. A year later the D.C. District Court used that second rationale to hold invalid the Circular 230 limitation on CPA’s charging contingent fees for preparing amended tax returns.

The conventional wisdom is that the IRS cannot regulate URPs without some Congressional modification to 31 U.S.C. 330.

This paper takes a contrarian position. It argues that there are other ways to frame the regulatory problem. Specifically, there are three potential regulatory paradigms: (1) regulating URPs as a subcategory of "practitioners," relying on the delegation of authority in title 31 (the failed approach); (2) regulating URPs as a subcategory of return preparers, relying on a delegation of authority in title 26; and (3) regulating non-taxpayer prepared returns as a subcategory of all returns, again relying on statutes in title 26 for the delegation of authority.

The paper concludes that the second approach, like the first, is unlikely to pass judicial scrutiny. However, the third paradigm -- regulating URPS by regulating their work product of returns -- is highly likely to survive judicial review.

The paper first reviews the policy reasons for regulating URPs and then explores how each of the three potential regulatory paradigms fit the general administrative law delegation of powers analysis.

Keywords: tax administration, unenrolled return preparer, regulation, Loving, Ridgely, URP, separation of powers, delegation powers, delegated powers, tax regulation, administrative procedure act, APA, tax returns, IRS regulations, Treasury regulations

JEL Classification: K34, K23

Suggested Citation

Camp, Bryan T., How the IRS Can Regulate Return Preparers Without New Law (September 21, 2015). Tax Notes, Vol. 148, No. 12, 2015. Available at SSRN:

Bryan T. Camp (Contact Author)

Texas Tech University School of Law ( email )

1802 Hartford
Lubbock, TX 79409
United States

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