IRS Sends Warnings on Missing EITC Checklists

The Internal Revenue Service is sending out warning letters to paid tax preparers who fail to submit Form 8867 checklists with tax returns that claim the Earned Income Tax Credit.

In an email to tax professionals Thursday, the IRS noted in the subject line that “EITC due diligence requires paid preparers to submit Form 8867.” The IRS added that penalties will be assessed for 2012 that lack Form 8867. The IRS is offering an online EITC Due Diligence Training Module to help avoid the penalties.

The IRS began requiring tax preparers to file a due diligence checklist with all claims for the EITC at the beginning of this year to discourage fraudulent claims (see Tax Preparers Required to File Checklist with EITC Claims).

The due diligence requirement was enacted by Congress over a decade ago to reduce errors on returns claiming the EITC, most of which are prepared by tax professionals. The IRS created Form 8867 to help preparers meet the requirement by obtaining eligibility information from their clients. Preparers have been required to keep copies of the form, or comparable documentation, which is subject to review by the IRS.