Navigating the PTIN Class Action Lawsuit: A Comprehensive Guide

In the realm of tax preparation, the Preparer Tax Identification Number (PTIN) has become an integral part of professional identification. However, a class action lawsuit, Steele v. United States, has challenged the legality of the fees associated with obtaining and renewing PTINs. This guide delves into the intricacies of this lawsuit and its potential implications for tax professionals.

The PTIN Class Action Lawsuit: A Background

In 2010, the Internal Revenue Service (IRS) implemented a fee structure for PTINs, raising concerns among tax return preparers. In response, a class action lawsuit, Steele v. United States, was filed in 2014. The plaintiffs, led by Adam Steele, Brittany Montrois, and Joseph Henchman, argued that the IRS lacked the authority to impose these fees.

The Legal Contention: Challenging the Fees

The crux of the lawsuit lies in the interpretation of the Independent Offices Appropriations Act (IOAA). The plaintiffs contend that the IRS’s imposition of PTIN fees violates the IOAA, which restricts federal agencies from charging fees unless they provide a specific benefit to identifiable individuals.

The Court’s Ruling: A Partial Victory for Tax Preparers

In 2017, the district court granted partial summary judgment in favor of the plaintiffs, ruling that the IRS lacked the authority to charge fees for PTINs. However, the court upheld the requirement for tax preparers to obtain PTINs. This decision provided a significant victory for tax preparers, potentially entitling them to refunds for previously paid fees.

The Appeal and the Ongoing Saga

The IRS appealed the district court’s decision to the D.C. Circuit Court of Appeals. In 2019, the appeals court upheld the IRS’s authority to charge PTIN fees, reversing the district court’s decision on this point. The appeals court, however, did not address the question of whether the fees were excessive.

The Current Status: Awaiting Further Developments

The Steele class action lawsuit remains ongoing, with the question of excessive PTIN fees still unresolved. Tax return preparers may still be eligible for partial refunds based on the district court’s ruling.

Conclusion: A Reminder of Tax Professionals’ Rights

The PTIN class action lawsuit highlights the importance of tax professionals’ rights and the need for transparency in government regulations. While the legal battle continues, tax preparers should stay informed about the latest developments and take necessary steps to protect their interests.

Frequently Asked Questions (FAQs)

Who is eligible for the PTIN class action lawsuit?

All individuals or entities who paid a fee for the application or renewal of a PTIN on or after September 30, 2010, are potentially eligible for the class action lawsuit.

What is the current status of the PTIN class action lawsuit?

The lawsuit is currently on appeal, with the D.C. Circuit Court of Appeals expected to make a final decision on the legality of the PTIN fees.

How can I stay informed about the PTIN class action lawsuit?

Tax professionals should regularly check legal news sources and IRS updates for the latest developments in the Steele class action lawsuit.

Should I seek legal advice regarding the PTIN class action lawsuit?

If you have questions or concerns about your potential eligibility for the class action lawsuit or the potential refund process, it is advisable to consult with an attorney specializing in tax law.

What is the IRS’s position on the PTIN class action lawsuit?

The IRS maintains that the PTIN fees are necessary to support the program and protect taxpayers from identity theft.

What is the future of the PTIN program and its fees?

The future of the PTIN program and its fees will depend on the outcome of the Steele class action lawsuit and any potential changes in tax regulations.

References

  • Steele v. United States, No. 1:14-cv-1523-RCL (D.D.C. June 1, 2017), aff’d in part, rev’d in part, Montrois v. United States, No. 17-5204, 2019 WL 720604 (D.C. Cir. Mar. 1, 2019).
  • IRS, “PTIN FAQs.”
  • Journal of Accountancy, “FAQs: Steele v. United States.”

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