Financial software provider Intuit Inc. (INTU) said it is "disappointed" in a district court decision preventing the Internal Revenue Service from regulating nonprofessional tax-return preparers.

According to Reuters, the decision relates to the IRS Return Preparer Initiative that began in 2011, requiring tax preparers to register with the IRS and to pass competency tests and take classes to maintain their registration with the agency. However in March of last year, three independent tax preparers and a civil-liberties advocacy group, challenged the program's legitimacy, accusing the IRS of enforcing the requirements without congressional approval. The IRS had said a law dating to 1884 gave it the authority, but the court disagreed.

Intuit--which offers the widely used tax preparation and filing software Turbo Tax--had testified in support of the IRS effort at the public hearing the agency conducted in Chicago in September 2010.

According to Intuit, the U.S. District Court for the District of Columbia's ruling--issued Friday--could affect up to 700,000 tax-return preparers who won't have to obtain credentials, ranging from independent preparers to employees at national storefronts, such as H&R Block Inc. (HRB).

"Intuit supports efforts to strengthen and enhance the tax preparation services industry and is disappointed in the court decision regarding IRS industry oversight," said Dan Maurer, senior vice president and general manager of Intuit's Consumer Tax Group. "The public interest is best served when all competing tax service providers meet high standards."

Shares of Intuit closed Friday at $63.68 and were inactive premarket. The stock has risen 12% in the past 12 months.

Write to Saabira Chaudhuri at
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