EDITORIAL: No sanction for greed
The Internal Revenue Service, scarred by scandal and incompetence, apparently still has time on its hands. The IRS wants to shut down kitchen-table accountants who earn a little extra cash helping friends and neighbors prepare their tax returns every April. The agency’s lawyers tried Tuesday to persuade a federal appellate court panel to apply a law, enacted three decades before there was an income tax, to back an IRS regulation imposing training and fees on anyone who fills out a tax return for someone else.
U.S. District Judge James E. Boasberg overturned the IRS rule and asked the logical question: “Why should tax-return preparers continue to pay into a system the court has found unlawful?” The stakes are big. Last year, the IRS collected $100 million in fees from mom-and-pop preparers who complied with the fees-and-training regulation.
Americans have been paying the tax on hard work for nearly a century, and over most of those years the kitchen-table tax preparers have helped taxpayers deal with unnecessarily complicated tax forms. The unlicensed preparers usually have day jobs and do their tax work for a few weeks before the annual April 15 filing deadline, when the demand for their help is greatest.
Whether these preparers should be licensed, which seems to us unnecessary and punitive, is in any case a policy question for Congress, not for an agency accountable to almost no one. Elected legislators have turned aside attempts in the past to impose such unnecessary training requirements. The IRS is an agency that no one trusts and everyone fears, and the civil servants at the IRS who abused their positions determining whose politics are acceptable and whose are not, should not be licensing small business.
There’s big money in preparing taxes, and the leaders of the business like the idea of licensing, which would hobble the accountant or the man or woman who’s good with figures. A spokesman for Intuit, maker of a popular software program that enables consumers to prepare and file their own returns, makes the argument for stifling competition. “The public interest is best served when all competing tax-service providers meet high standards.” That’s easy for him to say. The large tax-preparation firms supervised by certified public accountants escape licensing. For the part-time preparer it’s often not worth the hassle of the licensing red tape. Eliminating competitors will make the annual ritual more expensive, time consuming and annoying.
The judges of the appeals court should not sanction this crony-protection scheme. The taxpayer gets few breaks now in a tax system rigged against him. The government is obliged to collect taxes due, but who prepares the returns should be of no consequence to the IRS. If the returns have errors, the IRS is fully capable of finding them and has no reluctance to impose penalties. The courts must not sanction greed.