A recent change to the regulations governing practice before the Internal Revenue Service, commonly known as “Circular 230,” is under attack.

In 2011, the IRS amended Circular 230 to regulate hundreds of thousands of tax return preparers who were not already covered by Circular 230 as attorneys or CPAs. The government describes these new regulations as of “exceptional importance to the administration of the tax laws.” But in January, the district court in Loving v. Internal Revenue Service granted declaratory and injunctive relief to the plaintiffs, concluding that the IRS lacked the authority to issue or enforce the new regulations. The government appealed and the D.C. Circuit heard oral arguments on Sept. 24. Observers described the circuit court as skeptical of the government’s arguments; some predicted that the court would affirm the decision. The court’s ruling will have a significant effect on the IRS and tax return preparers and could have implications for other practitioners