The Internal Revenue Service has expanded its compliance program for the Earned Income Tax Credit to cover a broader base of both new and experienced tax preparers in an effort to prevent errors and misrepresentations.
The EITC Paid Preparer Compliance Program now has new tiers of outreach, education and compliance, the IRS explained on a
“Some errors are caused by misinterpreting the law; some are because the preparer accepted client-provided information at face value and others are out and out fraud,” said the IRS. “You, as part of the tax preparation community, are crucial in stemming these errors because paid preparers produce two thirds of EITC claims.”
The IRS estimates that 24 to 29 percent of all EITC claims have some type of error, costing the federal government $13 billion to $16 billion each year.
The IRS noted that approximately 60 percent of EITC errors fall into three key categories: claiming a child who does not meet the age, relationship, joint return, or residency tests; filing as single or head of household when legally married; and over-or under-reporting income or business expenses to maximize the credit.
To help preparers better understand the EITC, the IRS is offering an
Last week, the IRS also proposed requiring tax preparers to file a due diligence checklist with any federal return claiming the EITC (see
