Maybe It's Just Too Complicated
The US Congress is considering a federal licensing requirement for all paid tax preparers. Apparently, even most paid preparers can't get the returns correct:
The senators heard from investigators at the Government Accountability
Office, who found mistakes in virtually every tax return filled out by
commercial chain preparers. The investigators said they looked at a
tiny number of tax returns, and that their conclusions could not be
generalized to the rest of the tax preparation industry.
You know why? Because I would bet you that the same amount of scrutiny could find errors in every single return submitted. There is just no way to get it all right. How about, you know, actually spending some time in Congress making the return easy enough that individuals don't feel the need to seek out paid preparers. Of course, the real reason for this initiative is that higher-dollar CPA firms and large accounting firms would like Congress to sit on its low-price competition (note that only chain-type firms were investigated). As Milton Freedman pointed out long ago about licensing:
The justification offered is always the same: to protect the consumer. However, the reason
is demonstrated by observing who lobbies at the state legislature for
the imposition or strengthening of licensure. The lobbyists are
invariably representatives of the occupation in question rather than of
the customers. True enough, plumbers presumably know better than anyone
else what their customers need to be protected against. However, it is
hard to regard altruistic concern for their customers as the primary
motive behind their determined efforts to get legal power to decide who
may be a plumber.
Of course, the last paragraph of the article demonstrates there is already a solution in place for poor tax preparer service:
Had the IRS found these problems on real returns, many preparers would
have been subject to penalties for negligence and willful or reckless
disregard of tax rules
So why is licensing needed at all?
Duane Gran:
A solution which may be more attainable than utopian plans for IRS reform would be to publish the names of CPAs with their success ratio. A CPA who consistently submits flawed returns would presumably get less business if the public had a way of knowing his or her track record. This seems more fact-based and would eliminate licensing.
April 11, 2006, 10:23 amBill:
I doubt that it's just chain preparers; I've seen a number of reports that show that IRS employees can't get it right either.
And Congress is the problem. Not only is the tax law obscenely complex, it is a moving target, with thousands of changes each year.
It's also apparent that our elected Congresscritters don't actually read or understand the legislation that they are inflicting on us. I don't have a cure; I'm not sure that there is a cure.
But as the annual deadline for payment of tribute approaches, I'm probably just in a bad mood.
April 11, 2006, 10:41 amMox:
My first thought is wow...the government's going to screw over poor people again with a liscensing requirement. Because, after all, requiring a person to have a liscense to do a job, just increases the cost of the job thereby screwing over the poor people.
My second thought is this: if people have to start doing their own taxes, especially people who don't know anything about it, they'll have waste time learning how to. That, in turn, might create a grassroots uprising to simplify the tax code; which would be a good thing, because then, all the tax accountants out there could lead productive lives.
My third thought: I'm buying stock in Quicken (makers of TurboTax)
April 11, 2006, 6:32 pmJim:
If we can't repeal the 16th amendment, how about a new amendment that would require any elected representative to prepare their own tax return? They'd have to certify, under penalty of perjury that they had prepared the return by themselves, without any professional assistance. (No using a computer program either!!). Of course how we'd get them to pass the amendment is a bit of a problem.
April 11, 2006, 6:52 pmTC:
Just pass the Fair Tax initiative and all of this goes away!
Instantly and forever!
fairtax.org.
April 12, 2006, 2:37 amCraig L:
This just proves how arrogant and out of touch Congress is (as if we didn't already know it). For them to sit there straight-faced and berate tax preparers for making mistakes, knowing full well how bloated and arcane our tax system is, is just appalling. We really need to get rid of every single one of them.
April 12, 2006, 4:13 pmPatty aka Redneck Granny:
I agree with Jim. Mox has a good idea also. LOL
April 13, 2006, 8:42 pm