Crony Capitalism: H & R Blocking Independent Tax Preparers From Doing Your Taxes
James Sherk reports at The Daily Signal that scummy H & R Block is lobbying Congress to bring more regulation to the tax prep industry.
This seems surreal. How often do businesses lobby Congress for more regulation?It is no accident that small business owners report government regulations and red tape as one of their greatest problems.
Quite often, actually.
Large companies can afford to comply with expensive regulations. Many of their small-business competitors cannot. So big businesses frequently lobby for stricter regulations in order to drive out small-business competition.
Here's the deal:
Legally, anyone can prepare his own taxes. Anyone can also prepare someone else's taxes for him. Approximately 350,000 independent tax preparers do exactly that.Most of these independent tax preparers are small mom-and-pop businesses active only in tax season. Often they serve minority and disadvantaged communities. In many cases, independent tax preparers provide basic and inexpensive services, such as reviewing clients' returns for math errors. Collectively, these independent preparers process millions of tax returns with relatively few problems.
Nonetheless, H&R Block wants Congress to require tax preparers pass a government exam, pay for continuing education, and pass a background check. These requirements would make working as a tax preparer much more expensive. The continuing education requirement would particularly burden seasonal tax preparers, who work other jobs the rest of the year.
H&R Block argues that these regulations would protect taxpayers from scam artists and fraud. But these are fairly small problems. Out of the tens of millions of tax returns filed each year, the IRS brings charges against only a few hundred.
Also, the IRS has a list of skilled, credentialed tax preparers.
Whoops, so H & R Block's move is superfluous -- that is, unless their real aim is not to make the tax prep industry safer, but more profitable for themselves.
Me? I think one screwing -- the one we get from Uncle Sam and all the elected lobbyist suckups who vote in all sorts of everything -- is enough.
People should be allowed to use unlicensed vendors at their own peril, whether a hair braider, baby sitter, or nail specialist.
And those who prefer the security that using a licensed vendor may provide, albeit at a higher cost, should be able to do that too.
In an ideal world, anyway.
Caveat Emptor.
Conan the Grammarian at March 19, 2016 5:35 AM
Exactly. I have no idea whether my tax preparer is has any kind of special license. He probably does, but I really don't know. My neighbors recommended him and he does the taxes of a lot of people with 1099s in movies and TV, and he seems to know his stuff. I adore him and actually look forward to seeing him, while hating the awful fear and timesuck of the taxes thing.
Amy Alkon at March 19, 2016 6:36 AM
The LAST people I would let do my taxes is anyone working for H & R Block.
Daghain at March 19, 2016 7:55 AM
If H&R Block wants to have only licensed tax preparers do other people's taxes are they also willing to have the law changed so that if there are mistakes than the tax preparer, and not the tax payer, now pays the penalty?
Further, what's to stop me from having someone else prepare my taxes "under the table" and I simply claim that I prepared them myself?
charles at March 19, 2016 8:18 AM
Further, what's to stop me from having someone else prepare my taxes "under the table" and I simply claim that I prepared them myself?
charles at March 19, 2016 8:18 AM
Absolutely nothing. I do people's taxes all the time for free, I never sign them as a paid preparer.
Dirty little secret. The software now is so good, you have to have a pretty complicated return to need to pay a professional tax preparer at all for your federal return. The state returns are where it gets tricky.
A lot of the states have a very good scam going, where if one filer of a joint return earns a tiny bit of income in that state, they rope in all of the joint income of both parties everywhere as a basis for the tax you pay in that state.
Isab at March 19, 2016 9:44 AM
How often do businesses lobby Congress for more regulation?
A lot more than you know. For precisely this reason: as barrier to entry into a market. For instance, many large corporations are in favor of Obamacare, specifically because it will keep smaller, nimbler competitors small.
I R A Darth Aggie at March 19, 2016 10:32 AM
Four states already have these requirements: California, Oregon, Maryland, and New York. NY even insists that out-of-state preparers who prepare NY returns get a NY license.
The snobs who favor licensing claim there are too many incompetent preparers. The real problem is that everybody with a lobbyist sticks his finger in the tax laws every single darn year.
I am a CA registered tax preparer.
jdgalt at March 19, 2016 10:58 AM
The real problem is the tax code is too damned complicated.
Conan the Grammarian at March 19, 2016 3:12 PM
California roped me for taxes on income not earned in California when I first moved out there after grad school. I filed a return for only the amount earned in California and it didn't match my federal income, so they rejected it. I recalculated it using the total income and percentage California said they were owed and my tax bill was $300 higher.
Conan the Grammarian at March 19, 2016 4:38 PM
Isab makes a good point. One year, we both earned income in a MO, my husband earned for a few months in CA. The way the tax forms are worded, they try to get all the money.
Similarly, in Missouri, the City of St. Louis has a local income tax. It applies to residents and people whose job location is within the city. If you were only in the city part of the year, you get to prorate your taxes based on the percent of the year you were in the city... which is great if you work a regular job. However, if you do seasonal work or changed jobs, it can suck.
When I moved out of St. Louis, thankfully, I also got a new employer. I went from being a part-time student worker to a full-time salaried employee. If I'd followed the instructions and just pro-rated my full income by time, St. Louis would've gotten a bunch of money they had zero claim to. Instead, I just sent them the one W2 that was applicable... but I did hire somebody to do our taxes that year precisely because of the state/local issues going on.
That was the one year I insisted upon having somebody else do them. Otherwise I've done them or used software.
Shannon at March 20, 2016 6:44 AM
More about taxes - as you know, your money counts, not you.
Radwaste at March 20, 2016 11:50 AM
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