This Company Wants to Make It Harder for You to File Taxes

By LaToya Rosario Published on March 19, 2016

The tax preparation company H&R Block is lobbying Congress to heavily regulate the tax preparation industry. This seems surreal. How often do businesses lobby Congress for more regulation?

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.

It is no accident that small business owners report government regulations and red tape as one of their greatest problems.

H&R Block seems to be trying to do the same thing to the tax preparation industry. 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.

Moreover, the government has less intrusive ways to protect against scams. The IRS, for example, maintains a directory of highly qualified tax preparers. Anyone worried about being scammed can use one of these certified preparers. This fixes the problems H&R Block has raised without eliminating competition from small businesses.

That is not enough for H&R Block. It wants expensive licensing imposed on all tax preparers. If passed, these regulations would drive many independent tax preparers out of business.

One of these independent tax preparers, Sabina Loving, spoke at The Heritage Foundation last year. Loving is a single mother from the South Side of Chicago who wanted to work for herself. She felt that the big tax preparation firms were taking advantage of many of her neighbors — charging hundreds of dollars to prepare a return. So she opened up her own firm that focused on providing low-cost tax preparation in her community.

If Congress licenses tax preparers, the expense will drive Loving out of business. Her clients will have to pay more to a large tax preparation firm.

H&R block has no problem with that. Congress should.


Copyright 2016 The Daily Signal

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