Scroll down for news on these hot topics:
- Refundable Credit Due Diligence Changes are coming
- Updated Due Diligence Training Module
- IRS Sending Refundable Credit Due Diligence Letters to Paid Tax Preparers who May be Noncompliant in Meeting their Due Diligence Requirements
- When Can Your Client's Expect Their Refunds?
- Revised Rules Allow More Taxpayers to Claim the EITC without a Qualifying Child
- Temporary Due Diligence Rules and Regulations and Proposed Rules Post on Federal Register
- Paid Preparer Due Diligence Penalties
- IRS EITC Compliance Strategy Brings in Injunctions
- Educational Opportunities
- Education Credit News
- Protect Your EFIN and PTIN
- Make a Complaint About a Tax Return Preparer
- Don't Miss Any Refundable Credit News
Several changes to tax preparer refundable credits due diligence requirements will be required due to the Tax Cuts and Jobs Act. New training will be available beginning in early January 2019. Check back for updates and further information.
We updated the training module with additional information on the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) and the 2017 Form 1098.
If you haven't already received CE credit this year, we encourage you to take the module and you may qualify for one continuing education credit. If you already took the module this year, we encourage you to review the updates, but you can't receive another credit.
IRS Sending Refundable Credit Due Diligence Letters to Paid Tax Preparers who May be Noncompliant in Meeting their Due Diligence Requirements
These letters are sent to raise awareness of questionable returns and assist paid preparers in meeting their due diligence requirements. IRS will continue to monitor the EITC returns prepared in the upcoming filing season to see if the quality of the preparers’ returns improves. You can view the letters, in both English and Spanish, here.
When Can Your Client's Expect Their Refunds?
If you your clients claim the Earned Income Tax credit (EITC) or the Additional Child Tax credit (ACTC) on your tax return, by law the IRS, can’t issue the refund before mid-February. Find out more on refund timing.
Revised Rules Allow More Taxpayers to Claim the EITC without a Qualifying Child
The IRS changed its position on who may claim the earned income tax credit (EITC) without a qualifying child in situations in which an individual meets the definition of a qualifying child for more than one taxpayer. Under the new rules, a taxpayer who may not claim an individual as a qualifying child after applying the tie-breaker rules may now claim the EITC without a qualifying child, if all other requirements are met.
The new rule is explained in proposed regulations issued on January 19, 2017. This change affects all open tax years. Thus, for example, you may apply this rule on a 2016 return or an amended return for an earlier year that is open under the statute of limitations.
This new rule may apply in households in which an individual meets the definition of a qualifying child for more than one taxpayer. For example, this new rule may apply in households in which grandparents, children, and grandchildren live together or in households with unmarried parents who both work. For more information and examples, see Applying Tiebreaker Rules to the Earned Income Tax Credit.
We will have further updates on these proposed regulations soon. We are working with software providers, tax return preparers, and other partners to get the word out and to update software and forms and instructions.
Temporary Rules and Regulations and Proposed Rules Post on Federal Register
Both the temporary rules and regulations for the Tax Return Preparer Due Diligence Penalty Under Section 6695(g) posted to the federal register.
Paid Preparer Due Diligence Penalties
- The $500 penalty for each failure to meet your due diligence for one or more of the credits is now adjusted for inflation. The penalty for tax year 2017 is $510. The penalty for 2018 will remain at $510.
- Paid preparers must exercise due diligence, conduct interviews, ask adequate questions to determine whether a taxpayer meets all the eligibility requirements for these credits and keep records. Failure to take these steps can be costly. The penalty will apply to each credit incorrectly submitted on a tax return and is now indexed for inflation. The penalty for failure to meet the due diligence requirements containing EITC, CTC or AOTC filed in 2017 is $510 per credit per return. For example, if the preparer fails to meet due diligence for ALL THREE credits, the preparer’s penalty would be $1,530 per return for 2018 returns.
Find out more about educational opportunities for finding out more about refundable credit eligibility rules, tax law and regulations updates, return preparer’s due diligence requirements and more. Many of the opportunities offer continuing education credits.
- Seminars from the nationwide tax forums can be audited or taken for continuing education credit. Find out more on our tax forum page. You can also download the seminar slides here.
- More Educational Opportunities
IRS EITC Compliance Strategy Brings in Injunctions
The IRS recently got another EITC due diligence injunction that prohibits preparers from preparing any further federal income tax returns. These EITC due diligence compliance strategy injunctions represent over $120 million dollars in harm to the government. Find more information on the process and the preparers involved here.
Protect Your EFIN and PTIN
Keep yourself and your practice safe from fraud. We have found unauthorized uses of PTINs, Preparer Tax Identification Numbers, and EFINs, Electronic Filing Identification Numbers. Find out more on our page, What Can I Do to Protect my EFIN and PTIN?
Make a Complaint Against a Tax Return Preparer
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