By Michael Cohn

A federal district court has ruled in favor of tax preparers who filed a class-action lawsuit against the Internal Revenue Service over its right to charge fees for Preparer Tax Identification Numbers, and the IRS may need to refund hundreds of millions of dollars in fees collected each year. In response the IRS has temporarily suspended the system.

The US District Court for the District of Columbia ruled last Thursday that although the IRS has the authority to require the use of PTINs, it does not have the authority to charge user fees. The case revolves around a set of regulations that the IRS and the Treasury Department issued in 2010 for registering tax preparers with PTINs. “In sum, the Court finds that although the IRS may require the use of PTINs, it may not charge fees for issuing PTINs,” wrote U.S. District Judge Royce C. Lamberth.

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Read the Court ruling here.