What is Form 8867?

IRS Now Penalizing Preparers for Missing Forms 8867

Starting with the 2013 tax year, IRS will penalize preparers who fail to include the Form 8867, Paid Preparer's Earned Income Credit Checklist. You must submit the Form 8867 with either electronic or paper EITC returns or claims for refund.

IRS will penalize preparers $500 for each failure to include the form with each EITC return or claim for refund.


El IRS Cobrará Penalidades a Preparadores por Negligencia en Adjuntar el Formulario 8867

A partir del año tributario 2013, el IRS cobrará una penalidad a todos los preparadores que no presenten o adjunten el Formulario 8867 (en inglés), Lista de Cotejo de Elegibilidad del Crédito Tributario por Ingreso del Trabajo, tanto en declaraciones electrónicas como aquellas en papel que incluyan o reclamen un reembolso del EITC.

El IRS cobrará a estos preparadores una penalidad de $500 por cada omisión en presentar o adjuntar el formulario.

 

EITC Due Diligence and Form 8867

If you are paid to prepare a return claiming EITC, due diligence regulations require you to complete and submit Form 8867, Paid Preparer's Earned Income Credit Checklist. Using the Form 8867 ensures you consider all EITC eligibility criteria for each return you prepare. Under the regulations finalized in December 2011, you are now required to:

  • Complete the form after you get the correct information from your client. And, document any additional questions you asked and your client’s replies, at the time of the interview.
  • Submit the Form 8867 with every electronic return with each EITC claim you prepare.
  • Attach the completed Form 8867 to any EITC return or claim for refund that you prepare and present to your client for sending in.
  • Give the completed Form 8867 to the signing paid preparer either electronically or on paper if you are not the signing tax return preparer.

 

Completing the Form 8867

You need to complete all five parts of the Form 8867:

  • Part I covers EITC eligibility requirements for all taxpayers
  • Part II covers EITC eligibility requirements for taxpayers with a child
  • Part III covers EITC eligibility requirements for taxpayers without a qualifying child
  • Part IV covers the preparer's due diligence requirements
  • Part V covers documents provided to you by your client


Tips on completing Form 8867

You need to answer the questions covering EITC eligibility on the Form 8867 using information from your client. We recommend you ask each question in language your client understands and ask open questions to get more information than a yes or no answer. For example, the question, "Is the taxpayer's filing status married filing separately?" Don't ask your clients what their filing status is. You need to ask all the questions needed and work with your client to find the correct filing status.. See some of the suggested questions you might ask of a married taxpayer who isn't planning to file a joint return to find out if he or she qualifies for single or head of household in our tips for "Handling the Most Common Errors" page.


Failure to Complete and Submit the Form 8867

Completing and submitting the Form 8867 for each tax return claiming EITC is a due diligence requirement. You must submit the completed Form 8867 with each EITC return you prepare and submit electronically or by mail. If you give your client an EITC return or electronic version to sign and send in, you must attach the completed Form 8867 to it. Be sure to stress the importance of sending in all the forms to the IRS. Also, keep a record of the forms and schedules you gave to your client.

If you fail to do so, you do not meet your due diligence requirements and are subject to a $500 penalty under Internal Revenue Code section 6695(g) for each EITC return or claim for refund. You are also subject to the $500 penalty for not completing the form. There is no maximum amount to the number of penalties IRS can impose. For example, if you submit 50 returns with EITC claims and no Forms 8867, your penalty would be $25,000.

What if I Don't Agree with the Penalties?

See, Appeal of EITC Due Diligence Penalties

Filing Season Letters and Acknowledgement Alerts

If the Form 8867 is not included with EITC returns you prepared, you may get a warning letter or an alert with your acknowledgements.

  • Letter 5364 is sent to those who prepared paper EITC returns without a Form 8867.
  • Acknowledgement Alerts are sent to those who prepared EITC returns electronically without Form 8867.

 

See Consequences of Filing EITC Returns Incorrectly for additional actions IRS can take for failing to meet your due diligence requirements.

Additional Due Diligence Topics

 

Return to Main Due Diligence Page

 

 

Page Last Reviewed or Updated: 01-May-2014