IRS Resources for the Earned Income Tax Credit

As the 2014 filing season draws near, now is a good time to be reminded about the IRS EITC Central website and what valuable information it has to offer preparers that are completing returns claiming the Earned Income Tax Credit.

Here is an example of some of the useful information it contains:

• Frequently Asked Preparer Questions
  These frequently asked preparer questions have been categorized into eight areas to help the preparer narrow down what they are interested in. The categories are Age, Relationship and Residency, Basic Qualifications, Due Diligence, Earned Income, Divorced and Separated Parents, Fraud, Qualifying Child of More than One Person, and Other EITC related questions.
  When you click on a topic area it will display the preparer question and the IRS answer. As part of the answer the IRS has highlighted the newest due diligence requirements that were finalized at the end of 2011.
• Preparer Due Diligence
  This section provides links to IRS EITC due diligence law and regulation explanation, the importance of Form 8867 (Paid Preparer's Earned Income Tax Checklist), the consequences of filing incorrect EITC returns, and other resources for the preparer to review that are related to their due diligence requirements when preparing returns that claim the Earned Income Tax Credit.
• IRS EITC Preparer Compliance Activities
  Included in this category is information about what the IRS is doing to educate preparers on the most common EITC errors and what compliance activities the IRS is performing.
• Hot Topics for Return Preparers
  Hot Topics provides preparers with information on what the IRS is presently doing in the EITC area. Here, you will find the latest information about the IRS educational letters and visits that take place each fall, information about due diligence audits that take place each fall, and more.
• EITC Training and Videos
  The IRS provides the following training programs and videos to help educate preparers on what their earned income tax credit due diligence requirements are:
• IRS EITC Due Diligence Training Module
• Due Diligence Videos
• IRS EITC Schedule C and Record Reconstruction Training
• Other Educational Opportunities

IRS Update: IRS EITC Preparer Compliance Update

The IRS is making changes to their ongoing EITC compliance efforts for the upcoming year. Beginning this month (October 2012), EITC return preparers that have been identified by the IRS as “at risk” for filing returns with EITC errors will receive compliance letters, educational visits, or be subject to a due diligence audit.

The IRS uses a risk-based scoring model to determine which preparers of EITC returns warrant one of the following types of actions from the IRS:

• Soft Compliance Letter - During October 2012 and November 2012 the IRS will be mailing 3,000 compliance letters to new and low-to-medium risk EITC preparers. Read More
• Knock and Talk (Educational Visit) - During December 2012, the IRS will conduct 100 educational visits to preparers whom the IRS has identified as filing highly questionable Tax Year 2011 EITC returns. Read More
• Due Diligence Audit Visit - Due diligence audits are performed on preparers whom the IRS has identified as being at the highest risk of preparing questionable EITC returns. Read More

Click here to read the entire CrossLink Tax Update that includes further information on IRS EITC Preparer Compliance.