deposit in full to a taxpayer’s account pursuant
to a written authorization of the taxpayer.A preparer that is also a financial institution
or preparer bank, may subsequently endorse or negotiate a refund
check as part of the check-clearing process through the financial system
after initial endorsement.
EITC Due Diligence
The IRS
will be sending letters starting October 1 to preparers filing
questionable EITC claims. The letters talk about the primary issues
identified on the returns, talk about the consequences of filing inaccurate
claims for EITC and lets the preparer know we will continue to monitor the
EITC claims they complete. The IRS will include Letter
5138 notifying preparers that IRS may audit their clients’ returns in this
mailing.
Paid preparers must meet four due diligence
requirements on returns when considering EITC. The Preparer's toolkit on our
EITC Central has information on the law and related regulations. Read more
about your responsibilities and learn how to protect yourself from potential
penalties in the Due Diligence section of
the Tax Preparer Toolkit.
It is focused and tiered with a goal of increasing the accuracy of EITC
claims filed. Walk your
clients through the EITC qualification requirements with this interactive
tool and show them if they qualify or not.
If your client's claims about self-employment
income seem inconsistent, incorrect or incomplete, you need to ask them more
questions. Find out how to meet your due diligence requirements and help
your self employed clients reconstruct their business records by taking EITC
Schedule C and Record Reconstruction Training.More than 86 percent of professional
preparers use tax return preparation software. IRS partnered with software
companies to form the IRS/Software Developers Working Group. This group
works to improve software and help preparers meet their due diligence
requirements.
Complete and submit Form 8867 for all paper and
electronic tax returns and for all other EITC claims for claims
with qualifying children and also for claims with no qualifying children. Any person who is a tax return preparer with
respect to any return or claim for refund who fails to comply
with due diligence requirements imposed by the Secretary by
regulations with respect to determining eligibility for, or the
amount of, the allowable EITC credit. There is the diligence
requirement to ask all the questions required on Form 8867 and
to keep a copy of form and EITC calculation worksheets. You also must ask
additional questions when the information your client gives you seems
incorrect, inconsistent or incomplete. Remember, you must complete and
submit the Form 8867 for all paper and electronic tax returns and for all
other EITC claims
regardless if with children or claims with no children.
The tax return preparer must keep a copy of the
Form 8867 and the EIC calculation
worksheet. You may feel that this is not you job but you
must verify the identity of the person giving you the return information and
keep a record of who provided the information and when information was
provided. It is your duty to keep copies of any documents your client
provided that you relied on to determine eligibility for the amount of the EITC.
To meet your earned income credit due diligence
requirements, you must complete the form with information you
get from your client. And, you must document, at the time of the interview,
any
