Larry Gibbs Quoted in Tax Notes Today Regarding IRS Authority to Implement Return Preparer Regulations

"Former IRS Commissioner and Plaintiffs' Counsel Debate Loving"
Tax Notes Today

Larry Gibbs is quoted regarding a recent D.C. District Court decision in Loving v. IRS, which held that the IRS does not have the authority to implement new return preparer regulations. Gibbs and four other former IRS commissioners filed an amicus brief expressing disagreement with the court's rationale, particularly disputing the court's finding that preparers do not provide advice to taxpayers when preparing returns.

Taxpayers employ return preparers "because preparers, knowledgeable as they are, advise and assist them in preparing their returns," Gibbs said, and that advice is then incorporated into how the preparer completes the tax return. He said the preparer is a representative of the taxpayer in preparing the tax return on behalf of the taxpayer. He compared the preparer-taxpayer relationship to an attorney-client relationship in the drafting of a will, explaining that the will document could only be valid with the signature of the client, similar to a tax return. "No one would dispute that the attorney is representing the client in preparing the client’s will," he said, and no one should dispute that the preparer is representing the taxpayer in preparing the taxpayer's return.

Finally, Gibbs said, over seventy percent of the taxpayers who use preparers authorize their preparers to represent them before the IRS when their returns are being processed by the IRS. They do so by checking a box on the face of their tax returns, which amounts to the same thing as if the taxpayers had given their preparers a power of attorney to represent them. In light of these factors, Gibbs said, the District Court decision in the Loving case should be reversed.

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