(Staff Attorney, Institute for Justice; J.D. 2006, Harvard),
Who would you rather prepare your taxes? A professional tax return preparer with over a dozen years experience in preparing tax returns for taxpayers without incident. Or me, an attorney who has never so much as taken a law school class or continuing legal education course in tax law, and gave up on doing his own taxes last year once he started needing to itemize his deductions. You probably think you’d prefer the first option, but the IRS says you’re wrong.
At a hearing that I am testifying at today, the IRS will consider adopting a sweeping licensing scheme that would place the careers of 700,000 tax preparers in jeopardy and likely harm over 87 million American taxpayers while benefiting a few politically-favored insiders.
Inexplicably, the proposed regulations exempt certain favored industry insiders. The IRS wants to exempt all attorneys and CPAs, regardless of whether individual attorneys and CPAs have any actual experience or qualifications in preparing tax returns.
But are most attorneys really that much better qualified to prepare your taxes? Absolutely not. Like me, most attorneys don’t have any special training or testing on tax law, let alone tax return preparation.
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.
[M]ake no mistake about it: These increased regulatory costs — along with the likely decrease in competition — will increase the cost of tax return preparation services. ... These proposed regulations are an attempt to fix a system that isn’t broken. You don’t need the IRS to approve who can prepare your taxes, and you certainly don’t need the IRS to favor an unqualified attorney like me over an experienced professional.