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IRS can't regulate tax preparers

Andrew Harrer | Bloomberg | Getty Images

A U.S. appeals court on Tuesday struck down the U.S. Internal Revenue Service's authority to regulate tax-return preparers, dealing a blow to the Obama administration, which has been trying to crack down on tax preparation fraud.

The unanimous decision from the U.S. Court of Appeals for the District of Columbia upheld a lower court ruling that invalidated test-taking and continuing education requirements that the IRS wanted to impose on hundreds of thousands of unregulated tax-return preparers.

"We agree with the District Court that the IRS's statutory authority ... cannot be stretched so broadly as to encompass authority to regulate tax-return preparers,'' the court's 19-page ruling said.

—By Reuters

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