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.|
We assign an appropriate compliance treatment in line with the preparer’s risk level. We consider what may be the cause of the errors:
We determine the extent of our compliance contacts depending on what category best fits the preparer.Our tiered approach starts with educational letters and we reserve barring preparers from filing tax returns to 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 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: