Saturday, January 9, 2010

The IRS' Heavy Hand of Tax Return Preparer Regulation

Don't get me started about the IRS' plan to register all tax preparers. Instead, I'll let The Wall Street Journal editorial board get started because they echo my sentiments exactly:
We're guessing that when Americans think of outlaw industries, tax preparers aren't the first rogues that come to mind. But lo, the nation's green eyeshades are now destined to come under the regulatory rule of the Internal Revenue Service as part of the Obama Administration's latest revenue grab.

Under the plan, which would begin with the 2011 tax season, 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. So having made tax filing so complicated that most Americans need help with their forms, Washington now wants to raise the price of such counsel by regulating advisers in a way that may reduce their supply. . .

. . . America's tax preparers are far from a band of desperados: CPAs and lawyers already make up a large percentage of those who assist taxpayers for a fee, and all paid preparers already have to put their name or ID numbers on client returns. The IRS can thus already see if the clients of certain preparers are on the edgy side in taking deductions or declaring income. The tax men can make auditing decisions accordingly. These new rules look like a redundant exercise to intimidate tax preparers to be less aggressive in urging clients to take tax deductions.

(Emphasis mine.)

The Department of Justice (DOJ) has nothing to do with the registering and continuing education of attorneys. The DOJ doesn't penalize attorneys for zealous representation of their clients. (Though sanctions can ordered by judges during trials at the judge's discretion, not as a policy of the DOJ.) The DOJ doesn't gather data on attorneys about the kinds of cases they take on, like the IRS has with this program. In short, the IRS seems to be the only government agency that has such a heavy hand in the regulation of the professionals that represent the taxpayers that come before them.

Outrageous.

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