Tax preparers who submitted a Tax Year 2011 client return claiming EITC (Earned Income Tax Credit) without attaching the Form 8867 (Paid Preparer’s Earned Income Credit Checklist) will likely receive a letter from the IRS warning them of a due diligence penalty of $500 for each EITC return submitted without Form 8867 for Tax Year 2012. There is no limit to the number of penalties a preparer may receive, and failure to comply with this due diligence requirement could result in revocation of a Registered Tax Return Preparer designation and/or Authorized IRS e-file Provider status.
Every EITC return must be submitted with the Form 8867 to avoid these penalties. This is true for returns filed both electronically and on paper. For more information about the EITC due diligence laws and regulations, as well as the consequences of filing EITC returns incorrectly, visit “What is Form 8867?”