Following up on Tuesday's post, IRS Issues New Tax Return Preparer Rules:  Wall Street Journal editorial, H&R Blockheads: The IRS Wants to Save You From Your Rogue Tax Accountant:

We're guessing that when Americans think of outlaw industries, tax preparers aren't the first rogues that come to mind. But lo, the nation's green eyeshades are now destined to come under the regulatory rule of the IRS as part of the Obama Administration's latest revenue grab.

Under the plan, which would begin with the 2011 tax season, anyone who takes money to help people with their taxes will have to register with the IRS, and eventually pass competency tests and sign up for continuing education. So having made tax filing so complicated that most Americans need help with their forms, Washington now wants to raise the price of such counsel by regulating advisers in a way that may reduce their supply. …

Cheering the new regulations are big tax preparers like H&R Block, who are only too happy to see the feds swoop in to put their mom-and-pop seasonal competitors out of business. …

The new IRS blueprint is already in play in California, whose rules for regulating tax preparers seem to have inspired Commissioner Shulman, including his new education and registration requirements. To get taxpayers away from preparers and off-the-shelf software, the state is pushing programs like CalFile, which allows voters to file returns through a state run electronic program. Under the ReadyReturn program, the state will even scour your W-2 for the year and send you a return for your signature already filled out. The eventual goal seems to be to have the government do everybody's state tax return, like the French do.

The feds are now getting in on this act, with Montana Democrat Max Baucus and Iowa Republican Chuck Grassley supporting a free e-file portal at the IRS Web site that would compete directly with private tax preparation software. In March, Treasury Secretary Timothy Geithner told a Ways and Means Committee hearing that he'd also like the IRS to begin sending taxpayers pre-completed returns.

We can certainly understand why Mr. Geithner wants government to do his returns, but please spare the rest of us. … The U.S. has survived for 235 years with an unregulated tax prep industry, but the Obama crowd can hardly resist grabbing one more corner of the private economy it doesn't control. Here's a better idea: If Washington doesn't like taxpayers working the system of legal deductions to reduce their tax burden, it can always simplify the code and flatten the rates.