Overview
This course presents an overview of tax preparers’ due diligence requirements in relation to filing claims for the earned income tax credit (EITC), as articulated by the Internal Revenue Service in conjunction with the initiative to reduce incorrect and fraudulent claims for this credit. The course is appropriate for both new and experienced tax practitioners whose clientele includes taxpayers who wish to claim the EITC.
The course begins by reviewing the 14 rules that must be applied to determine eligibility for the credit. The three most common areas of errors detected by the IRS on EITC claims are described, followed by an outline of the tax preparer’s due diligence obligations in each area. A review is then presented of the four ways in which the IRS expects due diligence to be applied, with emphasis on the checklist that must be used. Several case studies are used to demonstrate the application of the tax law and due diligence requirements, and the penalties for filing EITC claims incorrectly are described.
Learning Objectives
After completing this course, you will be able to:
- correctly apply the 14 different rules that apply to taxpayers’ eligibility to claim the EITC
- identify the three most common errors in filing claims for the EITC detected by the IRS and recognize the due diligence measures that tax preparers can take to avoid these errors
- identify the four types of due diligence that tax preparers must exercise when preparing an EITC claim
- identify the purpose of IRS Form 8867 and the type of information it contains
- given basic personal details of a taxpayer wishing to claim EITC, recognize the types of questions a tax preparer should ask to determine eligibility for EITC
- identify the types of penalties and other consequences that may apply to taxpayers, tax preparers, and tax preparation firms in cases where an incorrect claim for EITC has been filed
Prerequisites
Basic understanding of federal tax law
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