We improved our EITC paid preparer compliance program and expanded it to include more preparers.
|Targeted||Our approach is to look at returns with a high likelihood of EITC error completed by the same preparer.|
|Tailored||We look for the cause of the errors. Is it not knowing the tax law; not applying it correctly, or, is it an intentional disregard of the tax law?|
|Tiered||Our goal is to reduce preparer errors by matching our response to the risk level of the same preparer continuing to have a high level of EITC error. Our responses range from education to barring return preparation through injunction.|
We estimate 22 to 26 percent of all EITC claims have some type of mistake which cost the government between $13.3 and $15.6 billion in 2013. Some errors are caused by misinterpreting the law; some because the preparer accepted client-provided information at face value and others are out and out fraud. You, as part of the tax preparation community, are crucial in stemming these errors because paid preparers produce the majority of EITC claims.
We know most of you in the paid preparer community practice due diligence and file accurate EITC claims. We developed this Preparer Compliance Program to ensure you compete on a level playing field.
About 60 percent of EITC errors fall into three key categories:
Preparers filing returns with questionable EITC claims may receive any of the treatments listed below:
IRS is now starting to assess a $500 per return penalty to preparers who do not submit the Form 8867 with EITC returns submitted electronically or attach the form to EITC returns given directly to his or her client for filing. Find out more about the form and the consequences of not completing or submitting the Form 8867.
Our first step is to reach out to preparers and provide education and other resources to help you avoid EITC errors and help you practice due diligence. This Return Preparer Toolkit has a wealth or resources: