IRS Update: EITC Changes for the Upcoming Filing Season

Increase in Due Diligence Penalty Amount

The penalty for tax preparers who do not exercise due diligence for EITC returns has been increased by the IRS to $500 per return.

Change to Due Diligence Requirements

The following changes to Earned Income Tax Due Diligence requirements (Section 6695 of the Internal Revenue Code) will go into effect for filed returns beginning on January 1, 2012:

• Form 8867 (Paid Preparer’s Earned Income Credit Checklist) is now required to be both completed by the paid preparer and submitted with a Federal income tax return that is claiming the Earned Income Tax Credit.
• A firm will now be subject to the same penalty as their preparers if...

Click here to continue reading the entire CrossLink Tax Update which includes detailed information on the changes to due diligence requirements as well as changes to 2011 Form 8867 (Paid Preparer’s Earned Income Credit Checklist).