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Per IRS guidelines, a paid tax return preparer can face potential consequences for not meeting the due diligence requirements listed on Form 8 8 6
Per IRS guidelines, a paid tax return preparer can face potential consequences for not meeting the due diligence requirements listed on Form A firm employing a preparer can also be subject to consequences for an employees failure to follow these due diligence rules. You must meet specific due diligence requirements if you are paid to prepare a tax return or to claim a refund on any of these tax benefits:
Earned Income Tax Credit EITC
Child Tax Credit CTC Additional Child Tax Credit ACTC Credit for Other Dependents ODC
American Opportunity Tax Credit AOTC
Head of household HOH filing status
Directions
Locate and read through Form Paid Preparers Due Diligence Checklist, found in the Supporting Materials section. You will be asked to specifically address items on the form and to expand on the expectations of the tax preparer in meeting the due diligence requirements outlined in Form
Specifically, you must address the following rubric criteria:
Introduction
Describe the requirements of tax practitioners relating to due diligence in paragraphs.
Knowledge Requirement
Explain how a tax practitioner can satisfy the knowledge requirement discussed on Form
Document Retention Record Keeping Requirement
Describe the type of documentation relied upon to complete Form and any accompany worksheets relating to applicable tax credits or HOH filing status.
Inquiry Level Reasonable Inquiries
Explain the types of inquiries that should be made to complete Form with proper due diligence.
Consider discussing the creditspecific and filing statusspecific questions noted on Form
Consequences
Explain the potential consequences of not meeting due diligence requirements.
Discuss any monetary or nonmonetary consequences.
Conclusion
Discuss the importance of Form and due diligence required of tax practitioner in paragraphs.
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