Things
have been tough for the IRS lately. First was the Fiscal Cliff fiasco
that caused headaches and delayed filing season. Then, less than a week
before the IRS started accepting returns, a U.S. District Court Judge,
James Boasberg, issued an opinion that barred the IRS from regulating
tax preparers. Forbes tells the story
in a recent article:

In
a complaint filed in the court less than a year earlier, a small group
of independent tax preparers represented by the Institute for Justice
had challenged the legality of the IRS regulating tax preparers. Their
contention was that Congress had never given the IRS regulatory
authority. Specifically at issue was the IRS’s requirements that tax
preparers register and pay a fee to the IRS in order to receive a
preparer tax identification number (PTIN) in addition to passing a
competency test and agreeing to pursue continuing education credits.
Judge Boasberg’s judgment stated that Congress had never given the IRS
the power to carry out a regulatory scheme.

Although
the IRS initially took down the PTIN registration and testing
registration from its website, a few days later the agency appealed to
have the injunction removed, reasoning that keeping the injunction in
place would cause permanent damage to the IRS and taxpayers.

In
response to the IRS’s appeal, the Institute for Justice claimed that
the numbers used by the IRS to justify their claims of irreparable harm
were grossly exaggerated. The Institute of Justice’s response to the IRS
appeal stated, “The IRS wildly inflates its numbers and now it knows
what it feels like to be on the wrong side of an audit.”

It remains to be seen if the injunction will stay in place or if it will be suspended. You can read the original complaint and answer, as well as the memorandum and other documents related to the case here.