Why It Could Be More Expensive to Do Your Taxes

Many people expect 2010 to be the last year with
 current marginal income tax rates, because the Bush
 tax cuts are set to expire. I'll have more on what that means
 for filing your 2010 tax return soon, because I have an article
 in an upcoming U.S. News issue on that very topic. But that's
 not the only way doing your taxes in 2010 might be less of a
drain on the wallet compared to doing them in 2011. The cost
of paying someone to do your taxes could be going up next year.
The IRS has announced starting in 2011 it will be regulating the
 tax return preparers who work on over 80 percent of all federal
income tax returns.

Starting with the 2011 tax season, the IRS plans to require

paid preparers to register with the agency. Subsequently --

the timeline is not yet firm -- they will be required to pass

competency tests and receive continuing professional education.

As we all know, making something more scarce also means making it
more expensive. Requiring registration and testing will reduce the
supply of tax return preparers, thus allowing those who remain to
charge more for their services.
That might be a cost worth taking. Daniel Indiviglio of the Atlantic
argues that we need to crackdown on "shady" tax preparers. But
 he also points out that there's another way to address the problem
of unregulated tax preparers that would yield much greater additional benefits.

...a much better solution would be to construct a new tax

system where we don't need tax preparers. Maybe I'm crazy,

but I think more simplicity is a far better alternative to more regulation.