Government attorneys recently told the U.S. Court of Appeals for the District of Columbia Circuit that the Horse Act of 1884 authorizes the Obama administration to regulate tax preparers – requiring them to pass a competency test and take annual education classes.
The IRS’s right to regulate tax preparers is currently being challenged before the appeals court (Sabina Loving et. al. v. Internal Revenue Service, U.S. Court of Appeals for the District of Columbia Circuit, No. 13-5061).
The government attorneys may not have been horsing around.
After the Civil War, many Americans brought war loss claims against the government, often for dead or missing horses. A cottage industry emerged as agents would represent clients for a fee – usually a percentage of the recovery – for pressing war loss claims. Soon many claims were being fraudulently inflated.
In response, the government began regulating the intermediaries, barring those who were deemed unscrupulous and certifying honest ones as “enrolled agents.” The term is still in use today to describe certain non-attorneys and non-CPAs who have been authorized to represent clients before the IRS.
It remains to be seen whether the appellate court judges will give the IRS regulatory authority a yea or a neigh.
“The income tax law has created more criminals than any other single act of government” – Barry Goldwater