Competition and regulating tax preparers

This news item is probably a tiny bit of good news for American tax payers.  The IRS has been told it cannot  regulate tax preparers.

Whatever the rationale,  regulations and in effect licensing would restrict  competition and force up prices.

Economic theory tells us that to have perfect competition all participants in a market should have perfect knowledge.

Therefore, If the IRS is concerned about the quality of work being done by some tax preparers, the way to deal with it is to require tax preparers to tell clients their qualifications and of any problems they have with the IRS with respect to other work.

 

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