IRS sending EITC warning letters to preparers

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Preparers who’ve submitted returns with sketchy claims for the Earned Income Tax Credit, the Child Tax Credit Tax Credit/Additional Child Tax Credit, and the American Opportunity Tax Credit will soon receive IRS Letter 5025, designed to "raise awareness around questionable tax returns” and spur preparers to meet due-diligence requirements.

Nationwide during 2019, 25 million workers and families received about $61 billion in EITCs, according to the IRS. The average EITC nationwide was about $2,504.

The IRS sent similar letters in 2015. In recent years, returns claiming an EITC were audited more than twice as often as all individual income tax returns.

“A review of the [2018] returns you prepared shows you may not have met your due diligence requirements and may have prepared inaccurate returns for your clients,” Letter 5025 opens. “This letter is to give you information and make you aware of the due diligence requirements that all paid preparers must follow.”

The letter also details the penalties for non-compliance, including fines, audits and referral to the IRS Criminal Investigation Division. “We’ll continue to check future returns you prepare that claim these benefits,” 5025 adds.

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EITC IRS Tax preparers Tax preparation Tax returns Tax credits Child tax credits