National Taxpayers Union Foundation submitted comments and testified against a proposed regulation by the outgoing Biden Administration that would change the rules to limit the ability of tax professionals to practice before the IRS with one-sided standards and by banning contingency fee arrangements that are crucial to access to justice.
In cases involving appraisals, the IRS proposes that the taxpayers’ appraisers be held to the standards of the Uniform Standard of Professional Appraisal Practice (USPAP). We argued that USPAP standards are not a requirement for appraisers but whatever standard applies to taxpayers’ appraisers should be held to IRS appraisers too. IRS appraisers do not always follow the USPAP. The IRS should follow its own advice instead of adopting this one-sided rule.
The Proposed Rule would ban all contingency fees, which we argue is harmful to low-income taxpayers or taxpayers who do not have a large sum of cash on hand to pay expensive tax practitioner fees. We also argue the change is outside of scope of the IRS’s statutory authority, stretching the underlying rule statute (31 U.S.C. § 330) beyond its meaning.
Overall, if left unedited, the Proposed Rule may hurt taxpayers. It is possible the proposed rule may be rescinded by the new administration, and we will provide updates on any developments.