Mounds of paperwork, pricey online filing systems and the creeping April deadline — tax season is a time of year loathed by most and when people are most susceptible to fraudulent tax preparation scams.

But a bill passed by the 2017 Nevada Legislature designed to widen the scope of consumer protections and regulatory muscle against predatory tax preparers has hit a stumbling block — a thus-far successful lawsuit preventing state officials from enforcing the law on a specific group of federally regulated tax preparation specialists.

Lawmakers were briefed during a Wednesday meeting of the Nevada Task Force on Financial Security on the tumultuous path the measure has taken since AB324 was overwhelmingly passed during the 2017 legislative session.

Despite the lawsuit, the bill itself appears to be experiencing initial success — the number of document preparation businesses registered with the state jumped from 276 in the 2017 fiscal year to 870 so far this year, a 68 percent increase.

The bill modified existing laws related to “document preparation services” first put in place by lawmakers in 2013 — generally defined as any person or business who assists a client with certain legal matters such as completing applications, translating answers or submitting a document to a court or other legal body.

It created a new fee system (initial $50 registration fee, and $25 for annual renewal) for document preparation services to fund the cost of administering the program, and expanded the document-preparer definition to include new categories such as any person or business that assists a client for profit in preparing all or most of their federal or state tax return.

Although the measure exempted attorneys and licensed certified public accountants, it did not exempt enrolled agents — individuals licensed by the U.S. Department of Treasury to represent, advise and prepare tax returns for individuals before the IRS. Enrolled agents are required to pass a series of tests and meet continuing education requirements and certain ethical standards.

Although he did not return a call seeking comment, bill sponsor Assemblyman Edgar Flores said during a March 2017 committee hearing that enrolled agents were “minimally competent to fill out a form,” and he suggested that consumers would have more protections and resource for recovery under the state law governing document preparation services.

“Nobody walks into a tax preparer and asks if they are an enrolled agent under the IRS, so even if their status is revoked, it means absolutely nothing for the consumer,” he said at the time.

Although no one testified against the bill (and only one lawmaker, Republican Assemblywoman Robin Titus, voted against it), its passage had an immediate chilling effect on the state’s relatively small community of around 550 enrolled agents.

Janet Vick, who heads the Nevada Society of Enrolled Agents, said there was no way to force the federally regulated group to comply with various state requirements that in many cases interfered with their obligations to clients.

“There are parts of the legislation that are impossible to comply with a federal license,” she said. “I can’t do my job and comply with this law.”

Carrie Corcoran, a Reno-based enrolled agent, listed a variety of ethical obligations required by her profession that would not be allowed under the law, including negotiating or communicating a client’s position to another person, having a fixed date for the beginning and end of a contract, appearing before a court or administrative body or providing any advice, opinions or recommendations to a client.

Corcoran said all of those rules would fly in the face of her obligations as an enrolled agent — she’s required to represent clients in front of the IRS when necessary in audit hearings, the unpredictable length of tax issues requires a more flexible schedule, and her general obligation to advise her clients on how to maximize their returns.

“We were all just dumbfounded that this could get put into law without any understanding of what an enrolled agent is,” she said.

Another issue is federalism — because Nevada doesn’t have a state income tax, and because enrolled agents are federally licensed, the law raised questions about the applicability of lumping them in with other document preparation services.

So, they sued. Corcoran, the nonprofit and another enrolled agent filed a legal challenge to the law last October and were granted a temporary injunction in November. Oral arguments in the case were heard earlier in July, and Carson City District Court Judge James Wilson verbally granted a permanent injunction, though Vick said the state has hinted that it would appeal the decision to the Nevada Supreme Court.

Gail Anderson, the deputy secretary of state for Southern Nevada and administrator of the program, told lawmakers Wednesday that the agency’s focus was more on identifying unregistered document preparers and individuals promising tax return services under-the-table and not on finding a way to include enrolled agents under the state’s purview.

“I would first like to say to the question, ‘Do tax preparers need to regulated?’ Yes, yes and yes,” she said during the meeting.

Instead, Anderson said enforcement of existing laws was a concern — the secretary of state’s office has just one investigator covering the entire state investigating complaints and pursuing unlicensed activity, and a single administrative assistant to process applications and check their bond status.

And of the office’s 108 current active complaints, about 22 percent of them deal with fraudulent activity by tax preparers, including cases where people are charged hundreds more for services, higher-than-expected fees for collecting a tax return, and flat out stealing returns. In an interview, Anderson said the office was looking at enforcement action against several unregistered document preparers, including suspended or disbarred attorneys operating in violation of the law.

Vick, who estimated that the association had spent around $50,000 in legal costs to fight the law, said she and many other enrolled agents agreed with the intent of the law and hoped lawmakers would be able to modify the law to again exempt them from the requirements.

“The sad thing about this whole situation is that it was preventable. We do want the unethical, unlicensed person dealt with. They’re breaking the law and make us all look terrible,” she said. “We would like to be part of the solution.”