Real Time EITC Preparer Pilot

We are continuing to test new compliance program, Real Time EITC Preparer treatment. We call it real time because we look at returns as they come in during the filing season and apply one of our compliance approaches immediately after we identify a high likelihood of EITC error. We ran a very small pilot during the 2012 filing season and are expanding the program for the 2013-filing season.

Real Time Cycle

Pre-filing season

  • Identify preparers who filed returns during the previous filing season that show a high likelihood of EITC errors.
  • Select sample of preparers for pilot.
  • Send warning letter* by certified mailbefore the start of the filing season that lets the preparer know we:
    • Identified the returns they filed as having a high likelihood of EITC errors;
    • Will monitor the returns they file for the upcoming filing season to see if there is improvement; and
    • Will take additional compliance action if we see no improvement.

*We will mail out our warning letters to preparers we identify as having a high likelihood of EITC errors for 2011 tax year returns between October 29th and December 3rd. Find an example of the letter, Letter 4833 here. (The letter is in Adobe format. If you don't have a current version of Adobe Reader, download a free copy of adobe reader here.)

Filing Season (January to mid-February)

  • Look at EITC returns filed by preparers selected for pilot during  the  earliest cycles of filing season
  • Identify preparers who are not showing improvement and select a compliance treatment that we perform immediately. If the preparer shows no improvement, we:
    • Conduct a real-time due diligence audit;
    • Call the preparer; or
    • Send a second letter. 

 

Letters and Compliance Calls Content

  • Outline due diligence responsibilities
  • Highlight recurring errors made on EITC returns
  • Point to EITC tools, information and other resources on both this site and irs.gov
  • Talk about the cost of not improving the quality of EITC claims
  • Explain that we are continuing to monitor the returns filed
  • Outline the consequences of not complying with due diligence requirements

 

Real-time Due Diligence Audits

Real-time due diligence audits have some differences from our standard due diligence audits. At these real-time due diligence audits, we are looking at the preparer's compliance with the four due diligence requirements listed in Regulation 1.6695-2 like other due diligence audit programs, but there are some differences:

  • Client returns identified for the audits are current year returns.
  • The number of client returns selected for audit varies depending on how many questionable EITC returns the preparer submitted during the current filing season.
  • Examiners contact the preparers face to face as soon as we select the preparer for a due diligence audit.
  • The examiner conducts the due diligence audit immediately to promote improvement in EITC return accuracy during the current filing season.

 

Additional Resources Links (click on any topic listed below for additional information on the subject):

 

Educational Opportunities for Avoiding EITC Error

This Return Preparer Toolkit has a wealth or resources:

  • An online training course to help you refresh your EITC tax law and due diligence knowledge is available in English and Spanish. This course may qualify for continuing education for you. Click here for the Due Diligence Training Module.
  • Our Schedule C and Record Reconstruction Training module  helps you meet your due diligence requirements while preparing returns with self-employment income and provides tips for helping your clients reconstruct their business records.
  • Our popular Due Diligence Videos help you avoid common EITC error situations and are fun to watch.
  • Visit the Frequently Asked Questions part of this site. Your colleagues have asked IRS numerous questions related to EITC. Our answers will guide you to the right answer for similar situations.
  • And more, follow the headings on the left navigation bar for more tips and tools to help you avoid EITC error.

 

 

Page Last Reviewed or Updated: 31-Jan-2014