As if tax season could not get any more complicated, frustrating and downright annoying, new rules from the Internal Revenue Service will have people around the country even more ticked off the closer it gets to April 15.
According to the Wall Street Journal, “Anyone who takes money to help people with their taxes will have to register with the IRS and eventually pass competency tests and sign up for continuing education.”
These new rules, the column argues, will increase prices for those seeking counsel on preparing their tax returns.
Why will prices go up?
First, these rules — obtaining IRS-approved certification, the cost of continuing education classes and the cost of so-called “competency tests” — will add up in costs for tax preparers.
Second, those tax preparers who cannot afford to comply with this new licensing scheme will go out of business. As a result, fewer options for tax advice means less competition.
It’s no wonder that big companies like H&R Block and professional associations like the American Institute for Certified Public Accountants support this licensing scheme.
As we have argued before, government officials often pitch licensing schemes under the guise of “protecting the consumer.”
For instance, according to an article in Businessweek, “IRS Commissioner Douglas Shulman said the return-preparer program would improve compliance and limit tax fraud.”
However, those who benefit most from licensing schemes are those already in the industry, especially those with large firms that can absorb the extra cost.
Smaller firms will have to increase their prices or go out of business, while those seeking to start their own independent tax-preparation firms will have more hoops to jump through.
In the end, it’s the big companies that win and, in this case, the taxpayers who lose.
The Institute for Justice, which is suing the IRS for overstepping its authority with this new rule, argues that this rule will affect “350,000 tax return preparers, forcing many of them to stop working in the occupation of their choice.”
While many students do not need a CPA or even an independent tax preparer to help file tax returns, this issue is important for us to know as we enter the business world and face more complicated tax rules.
The IRS already forces us to give up enough of our freedom as it stands; it should at least let us have the freedom to choose who helps us navigate its convoluted code.
