We improved our EITC paid preparer compliance program and expanded it to include more preparers.
|We look at the characteristics of EITC returns completed by the same preparer and focus on questionable claims. We focus on a combination of characteristics that we know indicates the returns have a high likelihood of error and assign a risk level.|
We assign an appropriate compliance treatment in line with the preparer’s risk level. We consider what may be the cause of the errors:
The EITC Paid Preparer Compliance program takes a tiered approach depending on what category best fits the preparer. Our tiered approach includes educational letters and visits, audits, penalties and may result in barring preparers from filing tax returns in extreme cases.
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 outright fraud. You, as part of the tax preparation community, are crucial in stemming these errors because paid preparers create the majority of EITC claims.
We know most paid preparers practice due diligence and prepare accurate EITC claims. But, 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 tiered treatments listed below:
IRS assesses a $500 penalty per return to preparers who do not submit the Form 8867, Paid Preparers EITC Due Diligence Checklist, with all EITC claims. The form must be submitted electronically or attached to each EITC claim given directly to clients for filing. Find out more about the Form 8867 and the consequences of not completing or submitting it.
Find out more about the Consequences of Failing to Meet Your EITC Due Diligence Requirements
We 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 of resources: