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Tax Notes Quotes Rachel Partain: Nevada Court Follows Loving on OPR Jurisdiction

March 21, 2017, Tax Notes

A Nevada district court has become the first court outside the District of Columbia to agree with the D.C. Circuit's holding that the IRS does not have the authority to regulate tax return preparers.

Rachel L. Partain of Caplin & Drysdale, Chtd. said the extension of Loving outside the D.C. Circuit is unsurprising. The portion concerning tax advice and regulation under section 330(e) does go further, she said. "That is going to hamstring, potentially, OPR's ability to conduct investigations in an advice context outside of practitioners who put in a power of attorney to represent taxpayers," she said.

. . .

Many practitioners have been worried about a court holding like the one in Sexton, Partain said. Loving restricted OPR's ability to use some portions of section 330 to regulate tax preparers "and now Sexton has cut back on [section] 330(e) in the advice context," she said. "People have noted for a while that [section] 330(e) is written in a not very clear fashion," Partain said, adding that the provision is written as a negative grant of authority rather than a positive one.

Further, the court in Sexton noted that section 330(e) does not have any enforcement "teeth," she said.

"Most practitioners who operate ethically want the IRS and Treasury to have tools at their disposal to regulate people out there who are providing advice . . . detrimental to taxpayers and the administration of tax generally," Partain said. The holding in Sexton is a step back from that goal, she said.

Partain said that while the holding may be bad for taxpayers and tax administration, it is good for return preparers generally. However, unlike in Loving, the relief in the Sexton decision is specific to the plaintiff, she said. "I think the government would argue in any subsequent cases that Sexton was a relatively limited opinion about this particular person who ultimately, it appears, was only involved with tax return preparation and advice relating to tax return preparation," she said.

For the full article, please visit Tax Notes’ website (subscription required).

Excerpt taken from the article “Nevada District Court Follows Loving on OPR Jurisdiction” by Nathan J. Richman for Tax Notes.

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