New Bill Would Give IRS Power Over Independent Tax Preparers

A bill introduced by two House Republicans earlier this month would force tax preparers to undergo continuous training and pass costly, restrictive licensing exams. According to a report from The Daily Signal, Reps. Diane Black and Pat Meehan presented the bill as a way to fight tax fraud and other criminal activity. But as IJ attorney Dan Alban pointed out, licensing doesn’t stop criminals, it merely shields big tax preparation firms like H&R Block from competition.  Alban told The Daily Signal:

“It will raise prices for consumers and give them fewer choices. And it won’t actually fix anything. Licensing does nothing to prevent fraud, and even licensed California preparers & IRS-trained preparers have high error rates on returns they prepare according to IRS studies and [Treasury Inspector General] reports.”

While big companies like H&R Block can easily absorb the additional costs imposed by new regulations, independent tax preparers–who often work seasonally and part-time–may be pushed out of business by these additional expenses. For exactly this reason, IJ joined three independent tax preparers in 2012 to file suit against the IRS. At the time, the IRS had just imposed a nationwide licensing scheme that required tax preparers to get special permission before they could do business. In 2014, the D.C. Circuit Court ruled that the IRS had not been granted this authority by Congress. Black and Meehan’s new bill, however, would change that.