Obama administration attempts to defend its effort to regulate the tax return preparation business for the first time in U.S. history

Patrick Temple-West finance.yahoo.com The Obama administration on Tuesday defended its effort to regulate the tax return preparation business for the first time in U.S. history, basing its case largely on a 19th century law dealing with horses lost or killed in the Civil War. At an appellate court hearing on a challenge brought by libertarian lawyers challenging the administration, Justice Department Tax Division lawyer Gilbert Rothenberg said: "I hate to beat a dead horse, especially one from the Civil War era." But he explained that the administration sees the "Horse Act of 1884" as providing ample authority for the U.S. Internal Revenue Service to regulate the tens of thousands of preparers who fill out millions of Americans' federal tax returns. A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit heard the administration's argument. Rothenberg said the IRS should be allowed to force tax return preparers -- who are now unregulated -- to pass a competency test and take annual continuing education classes. But the Institute for Justice, a libertarian advocacy law firm, disagreed. "Congress never gave the IRS authority to regulate tax preparers," said Dan Alban, an attorney for the institute. The case has broad implications for the industry, which includes H&R Block Inc, a few mid-tier companies and thousands of tiny, mom-and-pop firms. A decision from the judges is still months away. In oral arguments, the judges -- all appointed by Republican presidents -- gave no clear sign of how they will rule, yea or neigh.

But they did question why the IRS was citing an 1884 law to justify trying to police tax return preparers in 2013.