Archive for October 8, 2011

Tax Preparers Would be Required to File Due Diligence Checklist with All EITC Claims in 2012


IRS Issues Proposed Regulations That Would Require Tax Preparers to File Due Diligence Checklist with All EITC Claims Submitted in 2012

IR-2011-98, Oct. 6, 2011

WASHINGTON —The Internal Revenue Service announced today that it is issuing proposed regulations that would require paid tax return preparers, beginning in 2012, to file a due diligence checklist, Form 8867, with any federal return claiming the Earned Income Tax Credit (EITC). It is the same form that is currently required to be completed and retained in a preparer’s records.

The due diligence requirement, enacted by Congress over a decade ago, was designed to reduce errors on returns claiming the EITC, most of which are prepared by tax professionals. » Read more..

IRS To Target EITC preparers who do not do Due Diligence


EITC Preparer Compliance – Targeted, Tailored and Tiered

According to the latest IRS release, because of the multiple system abuse by taxpayers and tax preparers not doing their due diligence when it comes to EITC the following steps will be necessary to stop system wide abuse.

This is what they will do for 2012 tax season: 



Our approach is to look at returns with a high likelihood of EITC error completed by the same preparer.


We look for the cause of the errors. Is it not knowing the tax law; not applying it correctly, or, is it an intentional disregard of the tax law?


Our goal is to reduce preparer errors by matching our response to the risk level of the same preparer continuing to have a high level of EITC error. Our responses range from reducing errors through education to barring return preparation through injunction.

 Why Have a Preparer Compliance Program?

We estimate 24 to 29 percent of all EITC claims have some type of mistake which costs the government $13 billion to $16 billion each year. » Read more..