EITC due diligence warnings on the way

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Preparers who filed returns claiming the Earned Income Tax Credit but who possibly fell short of due diligence requirements will soon receive IRS Letter 4858, “Alert to Return Preparers Related to EITC Claims.”

In response to concerns about fraudulent or mistaken EITC claims, over the past few years the IRS has been putting more of a burden on tax preparers to vet their clients more carefully, including filling out Form 8867, “Paid Preparer’s Due Diligence Checklist.”

Disregarding the mailed reminders and their requirements could mean penalties (https://www.eitc.irs.gov/tax-preparer-toolkit/preparer-due-diligence/consequences-of-failing-to-meet-your-due-diligence) for preparers ranging generally from $500 to $5,000.

IRS instructions for preparers who receive the notice include: “Review your office procedures to make sure you meet all four due diligence requirements. If you receive this letter, we will continue to monitor the refundable credit returns you prepare.”

The Tax Preparer Toolkit on IRS.gov has more information on due diligence requirements.

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EITC Tax credits Tax preparation Tax returns Tax season IRS