I understand that some states have requirements of their own for individuals wishing to prepare taxes and receive pay (see California). I personally feel the IRS has the right idea with this though. Tax law is complicated, and no one should be allowed to prepare taxes without passing some kind of competency exam. I do agree with one of the suggestions made that for states such as California exceptions to the requirement should be available. The IRS's competency exam is not that expensive and is not impossible to pass--Publication 17 along with form instructions for the 1040 are available to reference if needed. Plus, it's a one-time thing provided you pass and keep up with the continuing education requirement. I don't understand why 3 people of the thousands that prepare taxes felt so depressed by this exam they had to sue over it; were they unable to pass it? Perhaps then they shouldn't be preparing taxes to begin with....