want to do is ignore the
letters. You could also make sure that your tax return software is not
automatically excluding Form 8867. So, for tax returns submitted
electronically, make sure the setting for including the Form 8867 is not
disabled and for paper returns, make sure you let your clients know the
importance of submitting all the forms you include. In addition, make sure
to keep a record of the forms you included in the package your give your
clients and personalize Form 8867 as much as possible by asking those
additional questions.
If the IRS examines your client's return and deny
all or a part of EITC, your client must pay back the amount in
error with interest. Furthermore, you client may need to file Form 8862 and
may be banned from claiming EITC for the next two years if the IRS finds the error is
because of reckless or intentional disregard of the rules.
If the error is extreme and due to fraud, your client may be banned from
claiming the Earned Income Credit for the next ten years.
If the IRS examines the EITC claims you
prepared and they find you did not meet all four due diligence
requirements, you can get A $500 penalty for each failure to
comply with EITC due
diligence requirements. You will get a minimum penalty of
$1,000 if you prepare a client return and IRS finds any part of the amount
of taxes owed is due to an unreasonable position.If
you just don't care and exercise reckless or intentional disregard for the
rules, you will be liable for a minimum penalty of $5,000.
IRS can also penalize an employer or employing
firm if an employee fails to comply with the EITC due
diligence requirements. However, there are only specific circumstances when
an employer is subject to the due diligence penalty.
You should be careful. Tax preparation is your
profession and you should always follow the due diligence rules. If you receive a return-related penalty, you can
also face suspension or expulsion. Your firm can also face
expulsion from the IRS e-file program. There are so many penalties involved,
such as many disciplinary actions by the IRS Office of Professional
Responsibility. If you deteriorate your service to such an extent, you can
also face injunctions barring you from preparing tax returns or imposing
conditions on the tax returns you may prepare.
Obtaining, Handling and Processing
Return Information from Taxpayers
An Electronic Return Originator (ERO) originates the
electronic submission of returns it either prepares or collects from
taxpayers who want to e-file their returns. An ERO originates the electronic
submission of a return after the taxpayer authorizes the filing of the
return via IRS e-file. The ERO must have either prepared the return or
collected it from a taxpayer. An ERO originates the electronic submission byelectronically sending the return to
a Transmitter that transmits the return to the IRS, bydirectly transmitting the return to the IRS or by providing
a return to an Intermediate Service Provider for processing prior to
transmission to the IRS.
The ERO must always identify the paid preparer (if any) in the appropriate
field of the electronic record of returns it originates. The ERO must enter
the paid preparer's
identifying information (name, address, Employer Identification Number (EIN),
when applicable and Preparer’s Tax Identification Number (PTIN)). EROs may
either transmit returns directly to the IRS or arrange with another
Authorized IRS
