The Internal Revenue Service may continue collecting an annual $50 fee from accountants and others who prepare tax returns for their clients, the D.C. Circuit ruled Friday (March 1).
In Montrois v. United States, the court rejected a class action lawsuit from a group of tax-return preparers who argued that the IRS overstepped its authority when it issued regulations in 2010 imposing a fee for any preparer to obtain or renew a special identification number with the agency. Every tax-return preparer—defined as anyone who prepares someone else’s tax return for compensation—needs an identification number to continue preparing other people’s taxes.
The tax preparers argued that IRS lacked the authority to impose the fee under the Independent Offices Appropriations Act, which permits agencies to assess fees for services in some circumstances. The preparers also argued that the fee was arbitrary and capricious.
A district court sided with the tax preparers, but on appeal, the D.C. Circuit found the fee was lawful. In an opinion by Judge Srinivasan (joined by Chief Judge Garland and Judge Millett), the court upheld the fee but remanded the case for the district judge to decide whether the amount of the fee “unreasonably exceeds the costs to the IRS to issue and maintain” the tax-preparer identification numbers.
The full opinion is here.
