IRS Relies on Rule from 1800s to Justify Tax Preparer Regulations


IRS Relies on Rule from 1800s to Justify Tax Preparer Regulations

by Joseph M. Donegan on October 9, 2013

The Internal Revenue Service is pulling out all the stops to support a set of proposed rules that would allow it to better regulate tax preparers, as evidenced by its use of a long-forgotten law from the 1800s to justify its argument.

At an appellate court hearing challenging the IRS tax law, Justice Department representative Gilbert Rothenberg cited the "Horse Act of 1884" as a governing piece of legislation that authorizes the IRS to regulate thousands of independent tax preparers, according to Reuters. Rothenberg explained that in the years following the Civil War, many Americans submitted war loss claims to the government for lost or missing horses. This led to the emergence of unregulated agents who would represent and lobby for these individuals for a fee. Over time, many agents began inflating both claim values and fees, which led to the government passing legislation to regulate intermediaries, Rothenberg concluded.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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