Big tax-preparation companies welcome profitable regulation

 

opinion, tax-preparers, irs, regulation
Big tax-preparation companies welcome profitable regulation
By Timothy P. Carney
The Internal Revenue Service has proposed new regulations on paid tax-preparers, and the biggest companies in this business have quickly responded — roundly endorsing the new regulations, whose primary effect may be to kill off their smaller competitors. 
H&R Block’s recent CEO, appointed deputy commissioner of the IRS by President Barack Obama, participated in crafting these new regulations, which benefit his company. 
The proposed rules would require all paid tax-preparers to register with the IRS, pay fees, pass government tests, and fulfill continuing education requirements.
So the regulations add to the cost of doing business, but the big guys can afford these higher costs, and, in fact, are already paying to comply. If these added efforts are valuable to consumers, then H&R Block should just publicize how careful and thorough they are in training their preparers. 
But maybe the market doesn’t value H&R Block’s efforts so much. What to do then? Well, you lobby Washington to regulate your lower-cost competitors out of business.
UBS, a major investment banker, issued an analysis this week describing how good the rules would be for H&R Block:
“The new regulations should help Block by: 1) reducing fraudulent preparers [that generate oversize refunds dishonestly], 2) add barriers to entry [or continuation] for small preparers, 3) provide revenue as Block may sell their continuing education and competency tests to others, and 4) perhaps boost paid prepared share.”
This is yet another example to dispel the media myth that regulation is about curbing the excess of big business. As with Obama’s tobacco regulations, Teddy Roosevelt’s meat inspections and George W. Bush’s toy-safety laws, big business is the supporter and the beneficiary of big-government regulation.
In such cases, regulation supporters typically respond by either denigrating the small businesses who would suffer, or by counting their loss as a necessary evil of protecting the consumer. And there are unscrupulous, fly-by-night tax-preparers out there. But taxpayers have plenty of access to trained, tested, registered and regulated tax-preparers. 
Of course, however accredited a tax-preparer is, they could still be sued or prosecuted for incompetence and fraud. So this regulation isn’t primarily about rooting out bogus claims, it’s about shutting down smaller operations.
Also at play is the confidence game. IRS regulation would add a government stamp of approval to paid preparers, helping them bring in new clients. UBS posits, “it is possible that regulation may boost the public’s perception of the value provided by paid preparers.”
It’s not hard to see the big tax-preparers’ fingerprints on these rules.
This is how Washington regulation works. Government imposes costs on businesses, big businesses welcome the costs, and small businesses crumble. This drives up costs for consumers and profits for the well-connected.
Timothy P. Carney is The Washington Examiner’s Lobbying Editor.

 

The Internal Revenue Service has proposed new regulations on paid tax-preparers, and the biggest companies in this business have quickly responded — roundly endorsing the new regulations, whose primary effect may be to kill off their smaller competitors. 

H&R Block’s recent CEO, appointed deputy commissioner of the IRS by President Barack Obama, participated in crafting these new regulations, which benefit his company. 

The proposed rules would require all paid tax-preparers to register with the IRS, pay fees, pass government tests, and fulfill continuing education requirements.

So the regulations add to the cost of doing business, but the big guys can afford these higher costs, and, in fact, are already paying to comply. If these added efforts are valuable to consumers, then H&R Block should just publicize how careful and thorough they are in training their preparers. 

But maybe the market doesn’t value H&R Block’s efforts so much. What to do then? Well, you lobby Washington to regulate your lower-cost competitors out of business.

UBS, a major investment banker, issued an analysis this week describing how good the rules would be for H&R Block:
“The new regulations should help Block by: 1) reducing fraudulent preparers [that generate oversize refunds dishonestly], 2) add barriers to entry [or continuation] for small preparers, 3) provide revenue as Block may sell their continuing education and competency tests to others, and 4) perhaps boost paid prepared share.”

This is yet another example to dispel the media myth that regulation is about curbing the excess of big business. As with Obama’s tobacco regulations, Teddy Roosevelt’s meat inspections and George W. Bush’s toy-safety laws, big business is the supporter and the beneficiary of big-government regulation.

In such cases, regulation supporters typically respond by either denigrating the small businesses who would suffer, or by counting their loss as a necessary evil of protecting the consumer. And there are unscrupulous, fly-by-night tax-preparers out there. But taxpayers have plenty of access to trained, tested, registered and regulated tax-preparers. 

Of course, however accredited a tax-preparer is, they could still be sued or prosecuted for incompetence and fraud. So this regulation isn’t primarily about rooting out bogus claims, it’s about shutting down smaller operations.

Also at play is the confidence game. IRS regulation would add a government stamp of approval to paid preparers, helping them bring in new clients. UBS posits, “it is possible that regulation may boost the public’s perception of the value provided by paid preparers.”

It’s not hard to see the big tax-preparers’ fingerprints on these rules.

This is how Washington regulation works. Government imposes costs on businesses, big businesses welcome the costs, and small businesses crumble. This drives up costs for consumers and profits for the well-connected.

Timothy P. Carney is The Washington Examiner’s Lobbying Editor.

Op Edsop-edOpinionregulation

If you find our journalism valuable and relevant, please consider joining our Examiner membership program.
Find out more at www.sfexaminer.com/join/

Just Posted

DA drops charges against man seen in video of officer using knee restraint

Footage leads to calls for SF police to explicity ban move used in death of George Floyd

City curfew to continue after board fails to muster votes to end it

San Francisco’s curfew order in response to days of protests was hotly… Continue reading

Bayview charter school sues SFUSD for more classroom space

Company calls plan to move to Treasure Island a ‘bad faith offer’

Supes move to reject Breed’s picks for police oversight body, call for strong reformers

Ronen, Mar cite qualification concerns in voting against Police Commission nominees

SF public defender urges police to explicitly bar technique used in George Floyd death

Public Defender Manohar Raju is calling for policy changes after a widely… Continue reading

Most Read