Could they push back and fight it?

In the end, if you do not get your license, and your state attorney general wants to go after you, you are going to fight it out in court and pay a lot of lawyer fees.Typical EM(Earnest Money) funds are $10. 

It will probably come down to a court fight.

He is why we moved here to Clarksville Tennessee, we came for a christmas visit, and what I saw of the Real Estate market really gave me a much needed reason to live instead of scratching to survive- we decided to sell our farm we had a bad rent to own person in- he had breached the contract in every possible way, for about 3 years, but we were busy battling in court saving our daughters from a cult they 'just knew god wanted them in', so we did not have the time money or location to fight with him- when I finally called him to tell him out- he announced, "but I sold it!"

I find if you buy on streets with more owner occupants and not a lot of multi units, you can really have a fighting chance of it being ok. 

Investors scour the MLS for deals daily so you will have all interested parties fighting over it if your price it right and they can make a buck on the rehab.

@Powell Chee,Take the position, but fight aggressively for the $20K+ and have all the analysis ready to prove why you're worth it!  

Do you feel it is worth fighting clients on behalf of the IRS over this particular rule? 

Rough neighborhood if you ask me....not saying that's good or bad but last time I showed a condo in that neighborhood I was greeted by a fighting pimp and hooker followed by a Good Samaritan who asked if I was lost...I stood out wearing my nice real estate uniform...ultimately buyer did not like the other "tenants" in that neighborhood.

I would not try to fight that impossible battle in NYC unless you're related to Saudi Royal Family or something.