804 F.3d 1193
D.C. Cir.2015Background
- The IRS created the voluntary Annual Filing Season Program (Rev. Proc. 2014-42) offering unenrolled tax preparers a "Record of Completion" and listing in the IRS online Directory if they complete education, pass a test, and accept parts of Circular 230.
- The American Institute of Certified Public Accountants (AICPA) sued, alleging the Program exceeds the IRS's statutory authority, is arbitrary and capricious, and violated notice-and-comment requirements.
- AICPA alleged three harms to its members: consumer confusion causing competitive injury, additional regulatory burdens on employed unenrolled preparers, and increased regulatory burdens on CPAs.
- The district court dismissed for lack of Article III standing, finding AICPA's asserted injuries flawed.
- On appeal, the D.C. Circuit reviewed standing de novo and focused on whether AICPA had competitor standing based on an alleged imminent increase in competition from credentialed unenrolled preparers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing (competitor standing) | AICPA: Program will let unenrolled preparers obtain government-backed credentials and directory listings, diluting CPA credentials and increasing competition. | IRS: Program is voluntary; any credentialing only helps unenrolled preparers compete among themselves, not against CPAs; alleged harms are speculative. | Court: AICPA has competitor standing—alleged increase in competition from credentialed unenrolled preparers is concrete and imminent enough to confer standing. |
| Causation of injury | AICPA: Credential plus directory listing will make unenrolled preparers more competitive, drawing clients from CPAs and employees of CPA firms. | IRS: Restrictions (no use of "certified/enrolled/licensed," Circular 230 limits) prevent meaningful competitive advantage or consumer confusion. | Court: Restrictions do not negate the competitive benefit of a Record of Completion and directory listing; basic economic logic supports plausible competitive harm. |
| Need to show actual harm before suit | AICPA: Need not wait for actual loss; increased competition is itself an injury. | IRS: Absent evidence of realized competitive harm, allegations are speculative. | Court: Precedent permits suit before actual transactions cause injury; increased competition suffices. |
| Zone-of-interests challenge | AICPA: Not raised below; association claims harms germane to its purpose and representational standing. | IRS: Argues AICPA’s grievance falls outside statutory zone of interests. | Court: Declined to consider zone-of-interests because IRS failed to raise it in district court; Lexmark treats zone test as non-jurisdictional. |
Key Cases Cited
- Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014) (invalidating mandatory preparer-registration rule and explaining voluntary credentialing may remain)
- Sherley v. Sebelius, 610 F.3d 69 (D.C. Cir. 2010) (competitor standing where government action expanded competing research opportunities)
- Shays v. FEC, 414 F.3d 76 (D.C. Cir. 2005) (regulations that restructure competitive environment can give plaintiffs standing)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (articulating the three Article III standing elements)
- State Nat'l Bank of Big Spring v. Lew, 795 F.3d 48 (D.C. Cir. 2015) (rejecting speculative chain of causation for competitor standing)
- Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014) (clarifying that the zone-of-interests test is not jurisdictional)