The IRS Attack on Small Business
We often hear the commonplace that the two certainties in life are death and taxes. (Though according to recent reports, we should probably amend that to death by taxes).
Not only does the IRS want your hard earned money, but it now appears the federal tax organization is intent on forcing regulations on to small, independent tax preparers in an apparent power grab that will benefit larger tax chains and limit your options as a consumer.
The new regulations, which were implemented last year, require that independent tax preparers register with the IRS, pay additional fees, and take a string of unending continuing education courses -- adding up to additional costs well over $354,000,000.
The rules would fall heavily on small business owners like Sabina Loving, who opened her own tax service in Chicago's South Side to provide financial advice to low income minority customers. The new rules would drive up her costs to the point where it would no longer be feasible to continue her business. It would cut down on the number of independent tax preparers, driving down competition and leaving many Americans with limited options when it comes to getting their taxes done.
Now the IRS is saying these rules are necessary to root out unscrupulous tax return preparers and to cut down on erroneous reports, but the solution the IRS proposes does not solve the problem: it would only drive bad tax preparers underground with no way to regulate them at all. And worse, it would put honest accountants out of business.
And if that's not enough, let's look at how the IRS is applying these rules. Large tax chains like H&R Block and Jackson Hewitt don't need to meet these requirements -- yet small tax prep companies do. And if you are registered with the CPA you also don't have to worry about adhering to the new regulations.
Simply put, these new rules will not make independent tax preparers better at their jobs, they are in place to force them out of business for the benefit of larger tax prep chains.
Fortunately, this insanity is not being taken sitting down. Sabina Loving and several other tax payers have joined forces with the Institute for Justice and have filed suit against the IRS.
I recently ventured to Chicago to speak with Ms. Loving and the good folks over at the Institute for Justice's Clinic on Entrepreneurship about the burdens the federal government is putting on independent tax preparers and what Loving is doing to fight back.
Watch more about Sabina's case below: