TAX PREPARER DUE DILIGENCE

Tax preparer due diligence. We receive calls from taxpayers who have had fraudulently filed tax returns and want to fix the problem. Crooked tax preparers can be the cause of a Tax Resolution nightmare. Some of the problems is that when fraud became rampant in our society, it slowly crept into taxpayers claiming incorrectly for the Child Tax Credit, or for multiple relatives who in fact they were not eligible to claim. The Tax Cuts and Jobs Act of 2017 expanded the IRC Section 6695(g) due diligence requirements to include the new Family Credits or Other Dependent Credit and the Head of Household filing status. Form 8867 has also been updated to incorporate these additional due diligence requirements. Although tax practitioners use Form 8867 as a guide to performing due diligence, it was not until the IRS released Treasury Decision 9842 on November 5, 2018, that practitioners had a clear definition of what qualifies as due diligence with regard to IRS section 6695(g). Practitioners must meet several conditions in order to satisfy the due diligence responsibility. Tax preparer due diligence.

The preparer must complete and submit form 8867, Paid Preparer’s Due Diligence Checklist, and this form must be completed. The preparer must compute the credits by either completing the worksheets included with the form instructions for IRS Form 1040 or Form 8863 based on information obtained by the taxpayer or otherwise record how the credit was computed. The preparer must have knowledge. The tax return preparer must not know or have reason to know that any information used to determine the taxpayer’s eligibility for one of the credits or the Head of Household status is incorrect.

The preparer must retain the records involved in the determination of the credits or Head of Household status, including a copy of the Form 8867, any worksheets or calculations used to determine the amounts, and a record of how and when the information used to complete Form 8867 was obtained. If you have dealt with a tax preparer who filed incorrect tax returns and need to fix your problem, we have done this for countless taxpayers. Our Tax Resolution Services include filing all past due tax returns, including incorrect returns, and then determining all options for dealing with your tax debt, to figure out options in the Internal Revenue Code for Tax Relief, so you don’t end up with a IRS Wage Garnishment.