Roth & Company, PC Tax Update Blog

Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

Institute for Justice speaks out on IRS power grab

October 09, 2010

The libertarian public interest legal advocate Institute for Justice has joined the fight against the impending tax prep regulation regime. In an article in the Daily Caller, IJ attorney Dan Alban rips the proposed IRS power grab:

This scheme would disproportionately hurt small tax-return preparation businesses and independent preparers, many of whom may be forced out of business. Part-time and seasonal preparers — as well as those who specialize in assisting low-income or special-needs clients, such as those with language barriers — are likely to be hardest hit. By contrast, large, politically connected industry insiders will be able to easily absorb the licensing costs and, predictably, many are in favor of the scheme.

In 2009, tax-return preparers prepared approximately 87 million federal individual income-tax returns. The proposed licensing scheme, if passed, will likely result in a substantial increase in the cost of tax-return preparation services for individual taxpayers.

And make no mistake about it: These increased regulatory costs — along with the likely decrease in competition — will increase the cost of tax return preparation services.

I owe Robert D. Flach a response to his latest pro-regulation post, but given October 15 deadlines, it will have to wait. When I do respond, I will discuss these issues:

- The (obvious) increased cost to consumers that the rules will impose.
- The almost-certain failure of the regulations to noticeably improve the quality of tax service.
- The "do you oppose regulation for doctors, lawyers and engineers, too?" red herring.
- The ridiculous and pointless busy work that the regulations will impose on CPE providers and their students.
- The way the regulations are likely to greatly complicate how accounting staff are used in combined tax and audit engagements.
- The regulatory capture problem and the artificial barriers to entry placed on tax services by incumbents, with the effect of increasing their incomes by keeping newcomers out.

Until then, the Alban piece does a nice job explaining the folly of the regulation proposals without my help. Read it all.

Related:

They can't get the current rules right, so let's have them make more rules

Scenes from a regulated restaurant.

UPDATE: The TaxProf has more.

UPDATE, 10-11-10 I'm not going to do some enormous, comprehensive and boring response to Robert. I will address the topics individually as I have time and inclination. And there will be no "Preparer regulation is evil" formal series of posts. If there is anything I click past quicker than a 12-paragraph blog post, it's a post with a headline something like "Regulatory Capture: Part XXIV of a series." If I wouldn't read it, I shouldn't expect my dear readers to. I've covered a lot of this ground already, and if you want a comprehensive roundup, just click the "preparer regulation" tag on the bottom of this post.

Enhanced by Zemanta

Tags: .....

      Bookmark: del.icio.usDiggreddit

Email: jkristan@rothcpa.com  •  Phone: (515) 244-0266
All content © Roth & Company, P.C.  •  Powered by Movable Type  •  Site by Sekimori Design