Paying taxes every April is bad enough. The Internal Revenue Service is making it even worse with a new set of regulations that require tax preparers, who fill out returns for taxpayers at rates as low as $50 a pop, to obtain a costly government license. Although tax preparers are already regulated by Congress, the IRS has never before required them to get government approval before setting up shop.
Small businesses and start-up entrepreneurs stand to suffer the most. As The Wall Street Journal reported, "Cheering the new regulations are big tax preparers like H&R Block, who are only too happy to see the feds swoop in to put their mom-and-pop seasonal competitors out of business."
To protect the rights of those mom-and-pop operations, the Institute for Justice, a public interest law firm, filed suit in March on behalf of three independent tax preparers in the U.S. District Court for the District of Columbia, charging the IRS with exceeding its statutory authority. "Congress never gave the IRS the authority to license tax preparers, and the IRS can't give itself that power," says Institute for Justice attorney Dan Alban. "This is an unlawful power grab by one of the most powerful federal agencies."