Hot Topics for Return Preparers

Scroll down for news on these hot topics:

  • Coronavirus Updates
  • Tax-Free CARES Grant for Higher Education
  • Final Due Diligence Regulations Published
  • Free IRS Tax Reform Due Diligence Webinar
  • Nationwide Tax Forum Due Diligence Training available online
  • Updated Due Diligence Training Module
  • IRS Sending Due Diligence Letters to Paid Tax Return Preparers  Who May be Noncompliant in Meeting their Due Diligence Requirements
  • When Can Your Client's Expect Their Refunds?
  • Paid Preparer Due Diligence Penalties
  • IRS EITC Compliance Strategy Brings Injunctions
  • Educational Opportunities
  • Protect Your EFIN and PTIN
  • Make a Complaint About a Tax Return Preparer
  • Don't Miss Any Refundable Credit News

Coronavirus Updates

The IRS has established a special section focused on steps to help taxpayers, businesses and other affected by the coronavirus on IRS.gov.

Tax-Free CARES Grant for Higher Education under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

There’s good news if you received an emergency financial aid grant from your school because you were financially impacted by the coronavirus (COVID-19) pandemic.

The grant is tax-free to you!  Do not include it in income on your 2020 tax return. Since the grant is tax-free, grant funds you use to pay for educational expenses cannot be used to claim the American opportunity tax credit, lifetime learning credit or the tuition and fees deduction on your tax return.

For more information on this topic, please see FAQs: Higher Education Emergency Relief Fund and Emergency Financial Aid Grants under the CARES Act or Publication 970, Tax Benefits for Education PDF.

 

Do not fax requests for Centralized Authorization File (CAF) numbers until further notice.

IRS operations to process third-party authorizations are now closed.

The Income Verification Express Service also is temporarily on hold. Possible alternative for tax administration purposes: clients can go to Get Transcript Online, create an account to verify their identities and immediately review or print a tax transcript. The IRS is unable to process paper tax returns, respond to paper correspondence or staff toll-free live service lines. Please use all electronic options available to you on IRS.gov or through your tax software provider.

See: IRS urges taxpayers to use electronic options; outlines online assistance

Final Due Diligence Regulation Published

Final Treasury Regulation § 1.6695-2, Tax Return preparer due diligence for certain tax returns and claims, was published November 7, 2018. Learn more about the extended rules PDF.

Free IRS Tax Reform Due Diligence Webinar

Tax Reform Due Diligence Requirements Webinar was held Thursday, December 13, 2018 at 2:00 PM EST.

The webinar was 60 minutes including Q&A.

For information on future Tax Reform Webinars visit the Upcoming Webinars page on IRS.gov.

Questions about the webinars?  Email us at:  cl.sl.web.conference.team@irs.gov

Nationwide Tax Forum Training Now Available

The IRS Nationwide Tax Forums Online (NFTO) provides information for tax professional from the speakers at the IRS Nationwide Tax Forums. Each online, self-study seminar includes interactive video synchronized with a PowerPoint presentation, along with downloadable slides and transcript.

NFTO seminars may be taken for either continuing professional education (CPE) credit or audit. NFTO is registered with the Internal Revenue Service and the National Association of State Boards of Accountancy (NASBA) as an approved sponsor of continuing professional education for CPA's and EA's.

Nationwide Tax Forum Videos - the videos focus on due diligence requirements for CTC/ODC and the exam process.

Updated Due Diligence Training Module

Several changes to tax preparer due diligence requirements have been included due to the Tax Cuts and Job Act.


We've updated the training module with information on new due diligence requirements under the Tax Cuts and Jobs Act of 2017.

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 Due Diligence Letters to Paid Tax Return Preparers Who May be Noncompliant in Meeting their Due Diligence Requirements

These letters are sent to raise awareness of questionable returns IRS received and assist paid preparers in meeting their due diligence requirements. IRS will continue to monitor returns prepared in the upcoming filing season to see if the accuracy 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 your clients claim the earned income tax credit (EITC), the additional child tax credit (ACTC) on their tax returns, by law the IRS, can’t issue the refund before mid-February. Find out more on refund timing.

Return to Top

Paid Preparer Due Diligence Penalties

  • The $500 penalty for each failure to meet your due diligence requirements for EITC, CTC/ACTC/ODC, AOTC or head of household (HOH) filing status is adjusted for inflation. The penalty for 2019 tax returns is $530 per failure.
  • Paid preparers must exercise due diligence by keeping records, conducting interviews and asking adequate questions to determine whether a taxpayer meets all the eligibility requirements for these credits and head of household filing status. Failure to take these steps can be costly.
  • The penalty applies to each credit and claim for HOH filing status incorrectly submitted on a tax return. For example, if a preparer fails to meet due diligence requirements for ALL THREE credits and HOH filing status, the preparer’s penalty would be $2,120 for 2019 tax return.

Educational Opportunities

Find opportunities to learn more about refundable credit eligibility, rules, filing status, tax law and regulations updates, return preparer’s due diligence requirements and more. Many of the opportunities offer continuing education credits.

Return to Top 

IRS Compliance Strategy Brings Injunctions

The Department of Justice can ask federal courts to permanently bar certain preparers form preparing federal tax returns for others if due diligence requirements are not met. Recent injunctions permanently barred preparers whose incorrect returns resulted in millions of dollars in losses 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?

Return to Top

Make a Complaint Against a Tax Return Preparer

Use this site to find out how to file a complaint about a tax preparer.

Don't Miss Any News

Visit What's Hot on EITC and Refundable Credit Central for more news related to refundable credits.

Return to Top