IRS Annual Filing Season Program (AFSP) Challenged by the AICPA

William Delaney, EA
Westwood MA

The American Institute of Certified Public Accountants (AICPA) filed a lawsuit with the District of Columbia District Court – AICPA v. IRS (Oct. 2014) to challenge the authority of the Internal Revenue Service’s Annual Filing Season Program along with the credential type recognition and federal directory listing which comes with participation in the program.  The legal action was dismissed by the district court on the grounds that the AICPA lacked standing.  The AICPA appealed.

On appeal, the U.S. Court of Appeals for the District of Columbia Circuit reversed the lower court and ruled that the AICPA legal action could go forward.  The decision was announced on October 30, 2015.

Some interesting aspects of the once again pending litigation…

The AICPA claims (and the court “must accept as true for purposes of assessing its standing”) that this program “will dilute the value of a CPA’s credential in the market for tax return preparer services.”  According to the court, “…the link between government-backed credentials offered to unenrolled preparers and the reputational benefit they will enjoy is hardly speculative.  Indeed, the reputational benefit is the very point of the IRS program.”

“Because increased competition almost surely injures a seller (i.e. the AICPA) in one form or another, he need not wait until allegedly illegal transactions hurt him competitively before challenging the…governmental decision that increases competition.”  (Court’s Opinion, page 9)

“As the Institute helpfully sums up, ‘because the Rule distorts the competitive marketplace and dilutes [Institute] members’ credentials by introducing a government-backed credential and a government-sponsored public listing, it harms those members regardless of whether it also confuses consumers.’”  (Court’s Opinion, page 11)

Although it is far too soon to know, your editor’s opinion is that this is a win for the AICPA waiting to happen.  Has the IRS once again overstepped its authority?