Ridgely, Jr v. Geithner , 55 F. Supp. 3d 89 ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
GERALD LEE RIDGELY, JR.,
Plaintiff,
v. Civil Action No. 1:12-cv-00565 (CRC)
JACOB J. LEW, et al.,
Defendants.
MEMORANDUM OPINION
To prevent “exploit[ation of] the audit selection process,” the Internal Revenue Service
(“IRS”) in 2007 prohibited a broad range of tax practitioners from charging contingent fees for
certain services relating to preparing, filing, or presenting tax returns or refund claims. 31 C.F.R.
§ 10.27. Plaintiff Gerald Lee Ridgely, Jr., a practicing CPA, brought suit against the Secretary of
the Treasury and the Commissioner of the IRS in their official capacities, arguing that the IRS1
exceeded the scope of its statutory authority in regulating the preparation and filing of “Ordinary
Refund Claims”—refund claims that practitioners file after a taxpayer has filed his original tax
return but before the IRS has initiated an audit of the return. Ridgely and the IRS cross-moved
for summary judgment. Concluding that the IRS lacks statutory authority to regulate the
preparation and filing of Ordinary Refund Claims, the Court grants Ridgely’s Motion.
I. Background
As most taxpayers know, the process of preparing, filing, and (in some cases)
adjudicating tax returns can be complicated. So before examining the merits of this case, the
1
This Opinion refers to the Department of the Treasury and its bureau, the IRS, interchangeably.
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Court will provide some background on how taxpayers interact with the IRS and how the IRS
treats the “Ordinary Refund Claims” at issue in this case.
A. Process for Preparing and Filing Refund Claims
Taxpayers proceed through three stages of interaction with the IRS: assessment and
collection, examination, and appeals. United States v. Galletti, 541 U.S. 114, 122 (2004).
“Assessment” refers to the “calculation of a recording of a tax liability” following a taxpayer’s
submission of his return. Id. Although the IRS accepts most taxpayers’ returns as filed, it selects
some returns for examination, or audit. Id.; 26 C.F.R. § 601.103(b). During the examination
stage, which may take place by mail or in-person, “a taxpayer may be represented before the
examiner by an attorney, certified public accountant, or other representative.” 26 C.F.R. §
601.105(b)(1). After the examination, the IRS may determine that the taxpayer owes additional
tax or that the IRS owes a refund to the taxpayer. Finally, if the taxpayer and IRS disagree over
the IRS’s disposition, the taxpayer may request an in-person conference with the IRS’s appeals
office, during which he may designate a representative to act on his behalf. 26 C.F.R. §§
601.103(b), (c)(1)-(3); 601.106(c). A taxpayer may then seek review in court. 26 C.F.R. §
601.103(c).
This case concerns the preparation and filing of the so-called “Ordinary Refund Claim,” a
procedure that a taxpayer may undertake if he determines that he has overpaid his taxes. A
taxpayer may file this type of claim after he has filed his tax return or during the course of an
examination, but prior to filing suit in court for a refund. I.R.C. § 7422(a). In his claim, a
taxpayer must detail the exact basis for the refund. Treas. Reg. 301.6402-2(b)(1). Should the
IRS disallow his claim, the taxpayer may appeal. I.R.C. § 6532(a). Particularly if the refund
claim is complex, a taxpayer may elect to hire a CPA to help prepare and file his claim.
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Before proceeding any further, the Court must explain exactly what actions constitute
“preparing and filing” an Ordinary Refund Claim. As Ridgely’s counsel made clear during the
hearing on the parties’ summary judgment motions, a CPA may assist a taxpayer in preparing
and filing a refund claim and, in doing so, would not be legally representing the taxpayer until
the IRS responds to the claim and the CPA submits a power-of-attorney form to the IRS.
Hearing Tr. at 14. Thus, what Ridgley challenges here is the IRS’s proclaimed authority to
regulate fee arrangements entered into by CPAs for preparing and filing Ordinary Refund Claims
before the commencement of any adversarial proceedings with the IRS or any formal legal
representation by the CPA.
B. Statutory and Regulatory Framework
This case concerns the breadth of the IRS’s authority to regulate CPAs, which is found in
31 U.S.C. § 330, a statute originally enacted in 1884. Pursuant to Section 330, the Treasury
Secretary has authority to regulate “persons” who practice before the Treasury Department. In
relevant part, Section 330 states:
(a) Subject to section 500 of title 5, the Secretary of the Treasury may –
(1) regulate the practice of representatives of persons before the Department of
the Treasury; and
(2) before admitting a representative to practice, require that the representative
demonstrate –
(A) good character;
(B) good reputation;
(C) necessary qualifications to enable the representative to provide to
persons valuable service; and
(D) competency to advise and assist persons in presenting their cases.
(b) After notice and opportunity for a proceeding, the Secretary may suspend or disbar
from practice before the Department, or censure, a representative who –
(1) is incompetent;
(2) is disreputable;
(3) violates regulations prescribed under this section; or
(4) with intent to defraud, willfully and knowingly misleads or threatens the
person being represented or a prospective person to be represented.
...
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(d) Nothing in this section or in any other provision of law shall be construed to
limit the authority of the Secretary of the Treasury to impose standards applicable to the
rendering of written advice with respect to any entity, transaction plan or arrangement, or
other plan or arrangement, which is of a type which the Secretary determines as having a
potential for tax avoidance or evasion.
Pursuant to this statutory authority, the Secretary of the Treasury publishes regulations
governing “practice” before the IRS in the Code of Federal Regulations, Title 31, part 10. These
regulations are commonly known as “Circular 230.” Most of Circular 230 outlines duties and
restrictions concerning “practice” before the IRS as they relate to practitioner character,
reputation, and competency. See 31 C.F.R. §§ 10.20-.38. The IRS has applied these regulations
to attorneys, CPAs, and other specified tax professionals. See 31 C.F.R. § 10.3 (2009).
Beginning in 1994, Circular 230 prohibited the use of contingent fee arrangements for preparing
original income tax returns, but allowed such arrangements in the context of preparing an
amended return or a claim for a refund.
In 2007, after a period of notice and comment, the IRS promulgated regulations
prohibiting the charging of contingent fees except in limited circumstances. Specifically, Section
10.27(a)-(b) of Circular 230 provides:
(a) In general. A practitioner may not charge an unconscionable fee in connection with
any matter before the Internal Revenue Service.
(b) Contingent fees—
(1) Except as provided in paragraphs (b)(2), (3), and (4) of this section, a
practitioner may not charge a contingent fee for services rendered in connection
with any matter before the Internal Revenue Service.
(2) A practitioner may charge a contingent fee for services rendered in connection
with the Service’s examination of, or challenge to—
(i) An original tax return; or
(ii) An amended return or claim for refund or credit where the amended
return or claim for refund or credit was filed within 120 days of the
taxpayer receiving a written notice of the examination of, or a written
challenge to the original tax return.
(3) A practitioner may charge a contingent fee for services rendered in connection
with a claim for credit or refund filed solely in connection with the determination
of statutory interest or penalties assessed by the Internal Revenue Service.
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(4) A practitioner may charge a contingent fee for services rendered in connection
with any judicial proceeding arising under the Internal Revenue Code.
Section 10.27 defines “matter before the Internal Revenue Service” to include “tax planning and
advice, preparing or filing or assisting in preparing or filing returns or claims for refund or credit,
and all matters connected with a presentation to the Internal Revenue Service or any of its
officers or employees relating to a taxpayer’s rights, privileges, or liabilities.” Circular 230 §
10.27. The provision therefore encompasses preparers of refund claims who “appear” before the
IRS only when they prepare and/or file refund claims. With this statutory and regulatory
framework in mind, the Court now turns to the particular facts of this case.
C. Factual and Procedural History
The IRS promulgated the contingent fee restrictions at issue in this case out of concern
about auditor independence. IRS Reply [Dkt. No. 40] at 15 (arguing that CPA practice of
“taking lucrative contingent fees from companies whose books they review . . . jeopardizes
auditor independence because it leads accountants and their clients to share financial interests”
(internal quotation marks omitted)). The plaintiff in this case, Gerald Ridgely, is a practicing
CPA. Amend. Compl. [Dkt. No. 31] ¶ 10. Required to comply with 10.27’s restrictions on
contingent fee arrangements, Ridgely argues that he has suffered a “loss of clients and significant
revenue,” Ridgely Reply [Dkt. No. 37] at 23, and that his “ability to represent and assist clients
in the preparation and filing of Ordinary Refund Claims and to practice before the IRS has been
severely restricted,” Amend. Compl. ¶ 26. Seeking injunctive and declaratory relief, Ridgely
sued the Secretary of the Treasury and the Commissioner of the IRS under the Administrative
Procedure Act, 5 U.S.C. §§ 701-706, and the Declaratory Judgment Act, 28 U.S.C. §§ 2201-
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2202. This Court previously determined that Ridgely has standing. Mar. 29, 2013 Order [Dkt.
No. 26].2 Both parties now move for summary judgment.
II. Legal Standard
Pursuant to Federal Rule of Civil Procedure 56, the court may grant summary judgment if
“the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247–48 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir.
2006). But this general standard does not apply to the court’s review of an administrative
decision under the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et. seq., which
requires courts to “hold unlawful and set aside agency action, findings, and conclusions” that are
“in excess of statutory jurisdiction, authority, or limitations, or short of statutory right.” 5 U.S.C.
§ 706(2)(C); see Sierra Club v. Mainella, 459 F. Supp. 2d 76, 89–90 (D.D.C. 2006). In an APA
case, “the function of the district court is to determine whether or not as a matter of law the
evidence in the administrative record permitted the agency to make the decision it did.” Sierra
Club, 459 F. Supp. 2d at 90 (citation omitted). “Summary judgment thus serves as the
mechanism for deciding, as a matter of law, whether the agency action is supported by the
administrative record and otherwise consistent with the APA standard of review.” Id. (citing
Richards v. INS, 554 F.2d 1173, 1177 & n.28 (D.C. Cir. 1977)).
The court reviews APA claims under the familiar two-step Chevron standard. Ass’n of
Private Sector Colls. & Univs. v. Duncan, 681 F.3d 427, 441 (D.C. Cir. 2012) (citing Chevron
U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984)). The court first uses the traditional tools of statutory
interpretation to determine “whether Congress has directly spoken to the precise question at
2
The Court also dismissed two plaintiffs and two counts of the Complaint for lack of jurisdiction
and failure to state a claim. Mar. 29, 2013 Order.
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issue.” Chevron, 467 U.S. at 842. “If the intent of Congress is clear, that is the end of the
matter; for the court, as well as the agency, must give effect to the unambiguously expressed
intent of Congress.” Id. at 842–43. “[I]f the statute is silent or ambiguous with respect to the
specific issue,” the court proceeds to step two, asking whether the agency’s interpretation “is
based on a permissible construction of the statute.” Id. at 843. The agency’s construction at step
two is permissible “unless it is arbitrary or capricious in substance, or manifestly contrary to the
statute.” Mayo Found. for Med. Educ. & Research v. United States, 131 S. Ct. 704, 711 (2011)
(citation omitted).
III. Analysis
Section 330(a) authorizes the Secretary of the Treasury to “regulate the practice of
representatives of persons before the Department of the Treasury.” 31 U.S.C. § 330(a)(1).3 As
both parties recognize, however, Congress “nowhere defined the meaning or scope of the term
‘practice’ before the Treasury Department.” IRS’s Mot. [Dkt. No. 35] at 15; see Ridgely Mot.
[Dkt. No. 34-1] at 21. Ridgely argues that the plain text of the statute and its surrounding
context reveals that the IRS’s authority is limited to regulating “practice,” and the preparation
and filing of Ordinary Refund Claims does not constitute “practice” because such claims, by
definition, precede agency adjudication. Ridgely Mot. at 20–21. The IRS, by contrast, insists
that “nothing in the term ‘practice’ suggests that the term excludes the fees charged by
representatives for preparing and filing refund claims which, by their very nature, relate to a
taxpayer’s liabilities.” IRS Mot. at 15. At Chevron step one, then, this case boils down to the
following question: does Section 330 unambiguously foreclose the IRS’s interpretation that
3
The parties have not raised, and the Court expresses no view on, the IRS’s authority to issue
and enforce standards of practice by representatives under other subsections.
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CPAs act as “representatives” who “practice” before the IRS when they prepare and file
Ordinary Refund Claims?
In determining whether statutory language is ambiguous, the Court must examine “the
language [of the statute] itself, the specific context in which that language is used, and the
broader context of the statute as a whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997).
Armed with the traditional tools of statutory interpretation—“text, structure, purpose, and
legislative history,” Pharm. Research & Mfrs. of Am. v. Thompson, 251 F.3d 219, 224 (D.C. Cir.
2001)—the Court’s task is to determine “whether the agency has stayed within the bounds of its
statutory authority.” City of Arlington v. FCC, 133 S. Ct. 1863, 1868 (2013) (emphasis omitted).
This Court, however, is not the first to venture down this particular rabbit hole. Earlier
this year, in Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014), the D.C. Circuit grappled with the
question of “whether the IRS’s authority to ‘regulate the practice of representatives of persons
before the Department of the Treasury’ encompasses authority to regulate tax-return preparers,”
Loving, 742 F.3d at 1016 (emphasis added), whom the Court in turn defined as persons who
“‘prepare[] for compensation, or who employ[] one or more persons to prepare for
compensation, all or a substantial portion of any return of tax or any claim for refund of tax
under the Internal Revenue Code,’” id. (quoting 26 C.F.R. § 301.7701-15(a)). The Court held
that the text, history, structure, and context of Section 330 “foreclose[d] and render[ed]
unreasonable” the IRS’s interpretation of Section 330. Id. at 1022. In other words, the IRS’s
interpretation failed at both Chevron step 1 and Chevron step 2. Id.As the IRS is quick to point out, though, Loving involved a different set of plaintiffs—
non-CPA tax-return preparers—and different provisions of Circular 230—Sections 10.3-10.6,
which imposed requirements to pay a fee, pass a qualifying exam, and complete continuing
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education classes. See Loving, 742 F.3d at 1015. But Loving also expressly addressed two key
questions that the Court faces here: who are “representatives” and what is “practice” under
Section 330? In the Court’s view, Loving is controlling precedent that must guide the Court’s
examination of Section 330’s text, context, and history with respect to the claims at issue in this
case.
A. Text of Section 330
The plain text of Section 330(a) limits the regulatory authority of the Secretary of the
Treasury to “the practice of representatives of persons before the Department of the Treasury.”
31 U.S.C. 330(a)(1). As the Loving court explained, two terms in this provision are key:
“representative” and “practice.” To fall under Section 330’s purview, the regulated conduct
must be “practice” and must be undertaken by a “representative.”
As to the meaning of the term “representative,” Loving is clear: a “representative” is
traditionally one “with authority to bind others.” 742 F.3d at 1016. Tax-return preparers neither
“possess legal authority to act on the taxpayer’s behalf” nor can they “legally bind the taxpayer
by acting on the taxpayer’s behalf.” Id. at 1017. They are, as a result, “not agents.” Id. As
mentioned earlier, the Loving court defined “tax return preparers” to expressly include those
preparing refund claims, but even if the court’s holding fails to directly cover CPAs preparing
and filing Ordinary Refund Claims, the court’s reasoning applies straightforwardly. CPAs
preparing and filing such claims before possessing any power of attorney possesses no “legal
authority to act on behalf of taxpayers.” Id. at 1017. In Loving’s words, these individuals
merely “assist[]” the taxpayer. Id. Thus, Section 330’s use of the term “representative” excludes
refund claim preparers, just as it did tax-return preparers in Loving.
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Loving also sheds light on the meaning of the term “practice” in Section 330. As the
Court explained, “practice . . . before the Department of the Treasury,” like practice before any
agency or court, “ordinarily refers to practice during an investigation, adversarial hearing, or
other adjudicative proceeding.” Id. at 1018. The process of filing an Ordinary Refund Claim—
again, before any back-and-forth with the IRS—is similar to the process of filing a tax return in
that both take place prior to any type of adversarial assessment of the taxpayer’s liability. If a
“tax-return preparer do[es] not practice before the IRS when [he] simply assist[s] in the
preparation of someone else’s tax return,” then a CPA hardly “practices” before the IRS when he
simply prepares and files a taxpayer’s refund claim, before being designated as the taxpayer’s
representative and before the commencement of an audit or appeal. Id. at 1018. Following
Loving, the Court therefore concludes that the plain text of Section 330 excludes preparers and
filers of Ordinary Refund Claims from the ambit of the IRS’s regulatory authority.
B. Context of Section 330
Like its plain text, Section 330’s broader statutory context leads the Court to conclude
that the IRS’s regulatory authority does not extend to those preparing and filing Ordinary Refund
Claims. “It is a fundamental canon of statutory construction that the words of a statute must be
read in their context and with a view to their place in the overall statutory scheme.” Roberts v.
Sea-Land Servs, Inc., 132 S. Ct. 1350, 1357 (2012) (internal quotation marks omitted). But
heeding the IRS’s interpretation of Section 330 would “effectively gut” Congress’s “carefully
articulated” framework for regulating those preparing and filing tax returns and tax refund
claims. Loving, 742 F.3d at 1020. This framework includes a number of statutes that deal
particularly with individuals preparing tax returns or refund claims. To start, 26 U.S.C. § 7701expressly defines “tax return preparer” to include individuals who prepare tax returns or tax
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refund claims. 26 U.S.C. § 7701(a)(36). Beyond grouping tax-return preparers and tax-refund
preparers in the same statutory definition, Congress enacted a comprehensive scheme of
penalties to curb the potential for abuse in the preparation and filing of both original returns and
refund claims. See 26 U.S.C. §§ 6662, 6663, 6676, 6694, 6701, 7206, and 7207 (penalizing
filing frivolous claims for refunds, inaccurate reporting, fraud, understatements due to
unreasonable positions, willful or reckless conduct, aiding and abetting understatements of tax
liabilities, willfully aiding or assisting in the preparation of fraudulent or false claims, and
willfully delivering fraudulent or false returns to the IRS). These provisions reveal that Congress
conceived of tax-return preparation and tax-refund preparation as similar activities that
qualitatively differ from the “practice” of presenting or adjudicating cases. But under the IRS’s
view, these specific provisions would serve no purpose, for Section 330 itself would have given
the IRS liberal authority to impose various penalties on tax-return preparers who behave
unethically. See Loving, 742 F.3d at 1020. The definition of “tax return preparer” and the need
to avoid surplusage support the conclusion that Congress differentiated between the preparation
and filing of refund claims on the one hand and their subsequent adjudication on the other.
Congress clearly intended to allow the IRS to regulate these two categories of activity
differently, and the grant of authority in Section 330 is limited to the latter.
C. History of Section 330
The history of Section 330 also indicates that the statute’s scope never encompassed the
mere preparation and filing of refund claims. The original language of Section 330 stated:
[T]he Secretary of the Treasury may prescribe rules and regulations governing the
recognition of agents, attorneys, or other persons representing claimants before his
Department, and may require of such persons, agents and attorneys, before being
recognized as representatives of claimants, that they shall show that they are of good
character and in good repute, possessed of the necessary qualifications to enable them to
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render such claimants valuable service, and otherwise competent to advise and assist such
claimants in the presentation of their cases.
Act of July 7, 1884, ch. 334, sec. 3, 23 Stat. 258, 258–59 (emphasis added). As Loving noted,
Congress’s use of “the words ‘agents,’ ‘attorneys,’ ‘claimants,’ ‘otherwise,’ and ‘presentation of
their cases’ in the original version of the statute” and Congress’s statement “in the statute itself
that it intended no change in meaning when it streamlined the statute in 1982” demonstrates that
“the statute contemplates representation in a contested proceeding.” 742 F.3d at 1020. Because
a CPA prepares and files an Ordinary Refund Claim before becoming a legal representative and
presenting his case, preparing and filing such claims is not within the scope of the actions
originally targeted by Section 330.
D. IRS’s Counter-Arguments
The IRS offers only one non-conclusory argument in response to the Court’s statutory
interpretation as guided by Loving: that because Ridgely is a CPA, he “is a representative who
practices before the Department and is therefore subject to the terms of Circular 230.” IRS Mot.
[Dkt. No. 35-1] at 25. In other words, according to the IRS, it has authority to regulate all
actions of CPAs who—at some point—“practice” before it, regardless of “whether they’re acting
in a representational or non representational capacity.” Hearing Tr. at 26. This argument,
however, poses three problems. First, it is inconsistent with the use of the word “practice” in
Section 330. The statute does not regulate “practitioners” generally; it regulates a specific kind
of activity they may undertake: “practice . . . before the [IRS].” 31 U.S.C. § 330(a)(1). Second,
the IRS’s position would read the word “representative” out of Section 330. As Loving made
clear, Section 330 only applies to individuals when they represent taxpayers. Third, adhering to
the IRS’s position would lead to absurd results. According to the IRS, it could broadly regulate
the actions of CPAs no matter what they were doing—even if their conduct was nowhere close to
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“practicing” before IRS—simply because, say, the CPAs “practiced” before the IRS once a year.
Meanwhile, the IRS would impose no contingent fee restrictions on the preparation and filing of
Ordinary Refund Claims by non-CPAs and those who never “practice” before the IRS. Nothing
in the statutory text (or, for that matter, the context and history of Section 330) gives the IRS this
kind of authority over CPAs specifically. Further, nothing in Section 10.27 indicates that the
IRS was concerned with CPA conduct in particular instead of with the ethics of fee arrangements
for preparation and filing generally. The Court therefore disagrees with the IRS that simply
because CPAs may at times practice before the IRS, the IRS has authority to regulate their
conduct without limit.
The IRS’s remaining arguments have been foreclosed by Loving. For example, the IRS
argues that it has “inherent authority” to regulate those that practice before it. IRS Mot. [Dkt.
No. 35] at 10. But as Loving held, the IRS’s regulatory authority is expressly circumscribed by
Section 330. 742 F.3d at 1014–16. The IRS also argued for the first time at the hearing that
Section 330(d) broadly authorizes the IRS to regulate those preparing and filing Ordinary Refund
Claims regardless of the capacity in which they act. Hearing Tr. at 26. But the IRS never
explained how Section 330(d), which concerns “the rendering of written advice,” encompasses
preparing or filing refund claims prior to formal legal representation. 31 U.S.C. § 330(d). If
“written advice” included such acts, it would also include preparing and filing tax returns, a
possibility foreclosed by Loving. In any event, as the Court has explained, the plain text,
context, and history of Section 330 paint a clear picture of the scope of the IRS’s authority with
respect to the preparation and filing of Ordinary Refund Claims. That clarity cannot be eclipsed
by brief, thinly supported references to ambiguous statutory language, the relevance of which the
IRS never really explains.
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Finally, the IRS hangs its hat on step 2 of the Court’s Chevron inquiry. But, because the
Court has concluded that the traditional tools of statutory interpretation unambiguously foreclose
the IRS’s interpretation—that is, the regulation fails Chevron step 1—the Court need not analyze
the regulation under Chevron step 2.
E. Permanent Injunction
Ridgely seeks both declaratory and injunctive relief, both of which the Court deems
appropriate here. In terms of the former, Ridgely seeks the Court’s declaratory judgment that the
IRS lacked statutory authority to promulgate contingent fee restrictions on those preparing and
filing Ordinary Refund Claims pursuant to Section 10.27 of Circular 230. In terms of the latter,
Ridgely asks the Court to permanently enjoin the IRS from enforcing this regulation. The Court
employs a four-factor test to determine whether to issue an injunction, examining whether (1) the
plaintiff has suffered an irreparable injury; (2) “remedies available at law, such as monetary
damages, are inadequate to compensate for that injury”; (3) “considering the balance of
hardships between the plaintiff and defendant, a remedy in equity is warranted”; and (4) a
permanent injunction would not disserve the public interest. eBay Inc. v. MercExchange,
L.L.C., 547 U.S. 388, 391 (2006).
Ridgely has satisfied all four prongs of this test. The Court finds that Ridgely’s asserted
loss of clients and income as a result of Circular 230’s restriction, see Amend. Compl. ¶ 10;
Ridgely Reply at 23, is an irreparable injury that no remedy at law would adequately
compensate. See Nat’l Mining Ass’n v. Army Corps of Eng’rs, 145 F.3d 1399, 1408–09 (D.C.
Cir. 1998). The Court also concludes that the balance of hardships tips in Ridgely’s favor, as the
IRS’s regulatory scheme is invalid and Ridgely has suffered financial loss. Finally, a permanent
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injunction would serve the public interest because of Section 10.27’s invalidity. The Court will
therefore grant Ridgely’s request for permanent injunctive relief.
IV. Conclusion
For the foregoing reasons, the Court will grant Ridgely’s Motion for Summary Judgment
and deny the IRS’s Motion for Summary Judgment. The Court will issue a separate Order
consistent with this Opinion.
Date: July 16, 2014
CHRISTOPHER R. COOPER
United States District Judge
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