It’s complicated, but it’s important. Now, more than ever, paid tax return preparers need to understand and educate themselves so they can avoid sanctions for giving false or misleading information to the IRS or for asserting frivolous positions that do not meet realistic possibility standards. Preparers need to recognize what is considered disreputable conduct resulting from improperly preparing returns, and learn to identify tax fraud schemes.
On December 20th the IRS announced that a due diligence checklist, Form 8867, will now be required to be filed with any federal return that claims the Earned Income Tax Credit (EITC). This decision will be enacted as of January 1, 2012, and all will affect returns filed after that date that claim the EITC.
The tax preparation industry has experienced many changes in the past couple of years, including the requirement for competency testing as a provision of tax preparer regulation. According to the IRS, the return preparer competency test will be released late in 2011.
John Sapp, Vice President of Strategic Development for Drake Software, explains and gives examples of procedures tax return preparers must follow to meet the IRS EIC due diligence “documentation” and “knowledge” requirements. This video also includes what to expect if the IRS performs an EIC due diligence audit of your firm.
Enrolled Agents and Enrolled Retirement Plan Agents must complete 72 hours of continuing education every three years – a minimum of 16 hours per year, two of which must be on ethics...