Occupational licensing is a tricky topic for those of us who have “professional” occupations. The notion that any old schmuck can simply hang out a shingle – in the case of a law practice – or open a brokerage with nothing more than a computer, smartphone, and printer – in the case of real estate – strikes fear in the hearts of established practitioners and of busybodies everywhere.
What about the ignorant public? What about the sacred profession (whichever profession) we’re a part of? What about my own livelihood?
If there are oxes to be gored, we’d prefer they be other peoples’ oxes. Not our own.
It didn’t used to be so. Occupational licensing and testing and fee-paying and continuing professional education programs didn’t really get going until the 1920s, a consequence of the progressive movement. In the 1950s, only about 1 in 20 American workers needed the government’s permission before pursuing their chosen occupation. Today, it’s almost one in three. Greg’s called this Rotarian socialism.
Enter the Internal Revenue Service. For nearly 100 years, tax preparers were unlicensed. Consumers – i.e., filers – could make their own decisions about whom they wished to hire in order to prepare their taxes. Civil and criminal statutes can punish preparers who prepare inaccurate or fraudulent returns.
But in 2011, the IRS decided these laws were not enough, and imposed sweeping changes that would require tax preparers to apply for licenses from the IRS in order to prepare federal tax returns on behalf of clients. The new regulations require all paid tax return preparers—except for attorneys and CPAS-to become a “registered tax return preparer” by taking and passing a competency examination, and paying application fees. They would also require preparers to complete 15 hours of continuing education.
The regulations did not spring ex nihilo into existence. They were largely drafted by the former CEO of H&R Block. Most occupational licensing helps big firms or brokerages which can bear the cost of training employees and paying fees, and who benefit disproportionately when small and independent providers are kept out of the business.
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