The IRS Regulates Mom-and-Pop Tax Preparers Out of Business, Just in Time for Tax Season!


As the year comes to a close, those W2s and 1099s are set to start rolling in. But on December 31, new IRS regulations will go into effect that will put mom-and-pop tax preparers out of business. The Institute for Justice has been fighting to delay or stop implementation of the new rules, but it looks like the good guys aren't going to win this one in time for the 2012 tax season:

In a twist that will surprise exactly no one, H&R Block and the other big tax prep firms are on board with the new rules, which throw up additional certification requirements, continuing education mandates, and other expensive barriers to entry for their smaller competitors. 

The regs are part of an IRS power grab—there was no congressional authorization for these new regulations. 

But hey! Since the budget mess is likely to delay the processing of tax returns this year anyway, you might as well take your time and figure out how to do your returns yourself this cycle, right? You probably won't be seeing that refund check for a while no matter what.

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  1. This is what government excels at; protecting us from independent entrepreneurial small businesses.


  2. Let’s hear from Plugs on why this job-killing, rent-seeking, corpokleptocratic, ultra vires rule is actually a good thing.

  3. Also- yesterday I read an article on Bloomberg (I think- it could have been Reuters) about how young professionals are never going to out-earn their bosses, or something.

    They focused on Architects (they’re fucked) and attorneys; they talked about the low and declining portion of freshly minted lawyers getting plum jobs at big important firms. Maybe that’s true, but it seems to me the avalanche of new regulations is going to provide work for generations to come, but they made no mention of in-house compliance officers.

    1. in-house compliance officers.

      We see no need to publicize our position, and made that clear to Bloomberg. Naturally, they, umm, respected our views.

      [polishes monocle, calls for orphan to bring a puppy for a good kicking.]

  4. Regulation is there to keep the economy from speeding forward and trampling the little guy. Unregulated transactions are something so frightening that I don’t even want to consider it.

  5. How does AICPA feel about the new regulations?

    1. I expect AICPA expects to make a tidy profit from providing the certification and continuing education.

      1. Not quite. CPAs are exempt from these new rules by virtue of being regulated enough. I am sure the AICPA will still offer assistance (for a fee of course) to these non-CPAs who are looking to be in compliance with the IRS though.

        As always, when people chortle that I must love how complex taxes become, I tell them it is stupid they need to hire someone like me in order to pay tax. Blank stares follow.

        1. being regulated enough


          1. That was a silly thing to say wasn’t it.

  6. Does the certification and continuing education requirement also apply to the IRS agents who, come tax time cannot ever give consistent results for a “theoretical” tax return?

    *You know, the annual tax time story from some news outlet where the same return is offered to a bunch of different IRS tax prep “advisers” whose numbers never ever coincide.

    1. Of course not. What are you, simple? These selfless heroes already sacrificed enough by going into public service, they can’t be asked to do any more. In fact, raises and more PTO all around!

    2. “*You know, the annual tax time story from some news outlet where the same return is offered to a bunch of different IRS tax prep “advisers” whose numbers never ever coincide.”

      This is due to lack of training. IRS agents will of course need more fully paid training in order to comply with the new regulations. Which will require more IRS agents to cover for those in training. What, we’re you expecting that they would pay that from their own pocket or study on their own time ? You must be a dangerous anarchist!

  7. I’m wondering, as a finance guy that left finance because too much assraping by the government for all the licensing and compliance, how much is the new regulations for taxes prep costing ?

    Because 15 hours of training doesn’t seem that much. I mean, it shouldn’t be there but I had to spent way more time than that to get the licenses to work in finance. I guess if my business was hanging on a 1000$ fee I’d probably go thru it but make sure my rep knew about the fact I would give the same amount to his opponent next time.

  8. People are getting too focused on the small detail of the new IRS regulations on the independent tax preparers. The much bigger issue with the new regulations is the ability of the IRS to now do unannounced “checks” on these independent’s offices and records. This part of the regulations allows the IRS to effectively bypass all taxpayer notification and look at the working papers and records the preparer maintains in the individual’s files. Independent preparers have had to fight for many years to maintain the confidentiality of their notes and working papers from IRS intrusion. Now, without notice, the IRS can see anything they want without audit notification to the taxpayer or subpoena to the preparer.

    That part of the Treasury regulations has gone completely unreported.

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