Court Again Rules IRS Exceeded Its Authority.

DALLAS, July 29, 2014 /PRNewswire/ -- A federal court has ruled that the U.S. Internal Revenue Service (IRS) exceeded its statutory authority when it banned contingent fee arrangements that help taxpayers receive legitimate tax refunds and provide an avenue for companies to benefit from tax incentives such as Research and Experimentation Tax Credits ("R&E tax credits") that promote U.S. job growth and technology leadership.  The suit was brought by Gerry L. Ridgely, Jr., an executive of Ryan, a leading global tax services firm, in the U.S. District Court for the District of Columbia.

Supporters of R&E tax credits acknowledge the programs are complex and require substantial resources to meet compliance provisions. Being prohibited from entering into results-based fee engagements often prevented businesses from taking advantage of credits intended to incent job creation and economic development. 

"Making it more difficult for taxpayers to receive the expert advice they need to navigate our complex tax laws undermines the intent Congress had when it has repeatedly endorsed R&E tax credit programs," said Gerry L. Ridgely, Jr., Executive Vice President and Vice Chairman at Ryan. "The decision by Judge Christopher R. Cooper is a major victory for innovation and economic growth.  Now taxpayers, and not the IRS, have the right to determine fee arrangements between themselves and their representatives."  

There is bi-partisan support for R&E tax credits designed to keep research and high-skilled jobs in the United States since they were first instituted in 1981.  According to a White House document on the issue, 80% of the benefit directly supports jobs in the United States, and every dollar spent on the tax credit creates two dollars in benefits to the economy by encouraging U.S.-based investments.

The suit was filed in 2012 to challenge the Circular 230 provisions generally prohibiting attorneys, certified public accountants (CPAs), and other practitioners from entering into contingent fee arrangements for services rendered in connection with certain matters before the IRS, including the preparation and filing of claims for refunds after a taxpayer has filed its original tax return, but before the IRS has initiated an audit of the return. The order, rendered July 16, 2014, invalidates and permanently enjoins the IRS from enforcing these Circular 230 restrictions.

"Ryan is very pleased with the ruling and proud to have led the charge against these overreaching regulations that improperly restricted the ability of taxpayers with bona fide refund claims to obtain representation to pursue their statutory right to a tax refund," said G. Brint Ryan, Chairman and CEO of Ryan. "We will continue to aggressively defend the rights of our clients, as well as all taxpayers everywhere, from unlawful and burdensome tax regulations.  As James Madison so famously said in 1788, 'There are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations.'"

For more information about this ruling, please see the Order and Memorandum Opinion.

About Ryan
Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the sixth largest corporate tax practice in the United States. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a three-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 1,800 professionals and associates serves over 9,000 clients in more than 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at www.ryan.com.

SOURCE Ryan