Motley Rice appointed lead counsel in class action suit against IRS

On June 30, 2015, Judge Royce C. Lamberth of the U.S. District Court for the District of Columbia appointed Motley Rice LLC as lead counsel in a proposed consolidated class action against the IRS for annual license fees charged to tax return preparers.  Motley Rice will represent a potential class of income tax return preparers, including CPAs, tax attorneys, and non-licensed preparers, in seeking to recoup these allegedly unlawful license fees.

The amended complaint, filed on August 7, 2015, alleges that the IRS created a scheme to regulate preparers despite Congress’ repeated failure to pass legislation authorizing the IRS to do so.

In 2010, the IRS began charging preparers an initial registration fee and an annual renewal fee for Preparer Tax Identification Numbers (PTIN).  However, prior to the scheme, the IRS provided preparers with a PTIN that did not expire or change, and provided these numbers at no charge. 

In arguing that the IRS does not have the authority to charge the fee for PTINs, the plaintiffs rely on a 2014 ruling by the D.C. Circuit in Loving v. IRS, 742 F.3d 1014 (D.C. Cir. 2014), holding that tax return preparation is not subject to regulation.  Loving struck down much of the scheme but did not address the PTIN fees that purportedly funded it. 

It is believed that between 700,000 and 1,200,000 preparers have paid at least the initial PTIN registration fee, if not additional annual renewal fees, amounting to more than $175,000,000 collected by the IRS.  In pursing this class action suit, the plaintiffs ultimately seek a refund of these allegedly improper PTIN fees.

The case is Adam Steele, et al. v. United States of America, Case No. 1:14-cv-01523-RCL.  Motley Rice member attorney and securities practice leader William H. Narwold will oversee the Motley Rice team in this case, working with Motley Rice attorneys Nathan D. Finch, Meghan S. B. Oliver, and Elizabeth Smith; and co-counsel Law Office of Allen Buckley LLC, Gupta Wessler PLLC, and Christopher Rizek of Caplin & Drysdale, Chartered.