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Occupational regulation of many professions has grown in magnitude and complexity in the past fifty years. Statutes relating to occupational regulation are often implemented by state legislatures without sufficient quantitative analysis. Prior studies have analyzed the need for regulation to protect consumers. Some research has been published which addresses the differences in the quality of services offered by regulated and unregulated professions. Due to lack of data, the effect of state regulation on commercial income tax preparers has not been quantified. Recently data from the 1979 cycle of the Taxpayer Compliance Measurement Program (TCMP) has been made available by the Internal Revenue Service (IRS). These data provided the opportunity for analysis relating to questions of quality of services offered by commercial income tax preparers. The analysis evaluated differences in error rates or amounts between returns prepared in a highly regulated state--Oregon, a state with minimum regulation--California, and the remaining forty-eight unregulated states. Items were chosen from the tax returns to evaluate the integrity and competency of the tax preparer, the effect of continuing education, and the accumulated effect of the totals of income, adjustments, and deductions. Descriptive statistics, cluster analysis, and non-parametric methods were used to test the hypotheses. Descriptive measures indicated that Oregon's error rates were among the lowest while California's errors were among the highest in the country. Cluster analysis grouped Oregon with states in the midwest while California grouped with other states in the sunbelt. The non-parametric tests indicated that Oregon's error rates and amounts were statistically smaller than the unregulated states. When Oregon was compared to the clustered states or to other states in the Northwest, the differences were not significant. When the samples from California were compared to those from the unregulated states, it was evident that the error rates were substantially higher in California. When California's errors were considered relative to the states from the sunbelt, the results were similar. The final comparison was made relative to levels of regulation. The errors on the returns from California were significantly larger than those from Oregon in all areas tested.

The purpose of this study was to determine the effects of interactions with IRS employees on tax practitioners' attitudes toward the IRS. The mission of the IRS is to inspire the highest degree of public confidence as it collects the proper amount of tax revenues at the least cost to the public. The IRS believes it must project a favorable image to tax practitioners in order to foster a high level of support for its mission. Prior surveys of tax practitioners found that practitioners have generally unfavorable attitudes toward the IRS and its employees. This study examined whether the unfavorable attitudes result from interactions with IRS employees, and provides empirical evidence of the effects of interactions with IRS employees on tax practitioners' attitudes toward the IRS.