More Tax Preparation Regulation on the Way

It looks like the IRS is leaning towards a massive increase in preparer regulation:

Shulman told the conference attendees that he saw several areas of consensus coming out of those meetings. First, he said, “the status quo is not optimal. Unethical and unqualified preparers can inflict tremendous harm on taxpayers and hurt the integrity of the tax system.”

The second area of consensus, according to Shulman, was that “we need to find a way to ensure that return preparers demonstrate their competency.” The third point was that “return preparers must maintain competency through ongoing education programs.”

Shulman acknowledged that the outcome of the review “could represent a big shift for the tax return preparer community.” However, he did not announce what that outcome would be.

Consensus my... foot. Count me out. The market already provides incentives to maintain competency, as do IRS criminal and civil sanctions. All an IRS-run CPE regime will lead to is create a great wallowing ineffective and expensive bureaucracy imposing useless and annoying costs on legitimate preparers while missing the back-alley scammers altogether.

Consumers can look for higher costs and fewer providers as the big franchised preparers game the system, gobble up market, and jack up prices. Meanwhile, return prep problems will persist -- not because preparers are stupid, but because the tax law is.