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Supply, demand.

October 12, 2010

Robert D Flach, as part of our ongoing friendly discussion, requests an explanation of why tax preparation costs are likely to go up under the proposed new IRS preparer regulation regime. We did so awhile back, but it bears repeating.

The whole point of the IRS exercise is to make it harder to be a tax preparer, by way of additional CPE requirements and tests. If something is harder to do, fewer people will do it. If the CPE requirements don't reduce the number of preparers, then the whole exercise is a waste of time, because everybody is already "qualified."

If the supply of something goes down without a corresponding reduction in demand, prices go up. That is the way of the world. Maybe Robert won't increase his prices, but that doesn't repeal the law of supply and demand. The supply of preparers will go down, but increased rates and ever-increasing tax complexity will make sure demand continues to rise. The result will be higher prices. To argue otherwise is like arguing that it won't get dark at sunset.


Related: Pushing back at the IRS preparer regulation plan

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What you pay is what you get. Yes, prices are higher but would you prefer to pay double since the previous tax preparer messed up. How about if those errors made you owe the irs or if you need to do an amended return. We (myself included) need to know more about the tax changes. Our firm offers free advice that can really help with your IRS problems,

Nancy, the law of supply and demand means you pay more for whatever you get.

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