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>>why are they imposing rules that make it necessary for tax preparers to take away some of that EIC money<< Come on, you could ask the same of any tax benefit. How about net operating loss? Instead of paying taxes, a business owner can reinvest the profits in his own enterprise, perhaps even in the form of a salary to himself. That can generate refunds for years back and decades forward, except of course I'm going to charge for the forms. A great deal of EIC fraud is actually Schedule C fraud, which is generally much easier to get away with than listing extra Social Security numbers. And I would guess that EIC is a relatively small part of Schedule C fraud. I have my own opinions about what are good or bad parts of our tax system, but professionally they are all good for me--it's what I do for a living. I give some price breaks, mostly if the client has very good records or has been loyal. But I don't refuse clients unless it's something beyond my skill. EIC is easy; even the due diligence questions are filled in automatically. Just use an organizer and an engagement letter with a proper interview. IRS is not looking at YOU.

I'm not worried about fraud. I'm worried about the time it will take to pour through bank statements to highlight biz deposits and to review biz bills paid and to explain why I need doctor bills with home address for the child (actually, ex-husband pays child's medical bills, so that won't work, and he's preschool age, so no school records yet). What do I need to prove child lived with mother all year (half year)? And, to take into account the gifts to mother and son from client's parents and on and on and on. What documentation do I need to keep? For how long?

I cannot say that I have ever lost any sleep over any EIC return that I have prepared. The due diligence doesn't bother me. EITC is part of the tax law and if I have a client who is entitled to receive this benefit, I do the necessary research to make sure that the client gets every deduction and/or credit that the law allows. I don't have a huge amount of them, but I do have several and they change as circumstances change. My clientele is fairly established so I generally know my clients very well and, as a sole preparer I generally know or can easily find out if they qualify. I believe every single client deserves the best job that I can legally do for them without having to go to HRB or Liberty to have a large portion of their return siphoned off. That is why I do what I do and have done the testing and followed the regs so that I am still here and able to help those who need me. Clients come in with returns from HRB and VITA; some of which are so badly botched that you can spot an error on the first page. Why would I, in good conscience, send someone who is already in need to one of those preparers? Luckily, however, I am not in an area where I am largely exposed to a lot of fraudulent claims.

Sorry if I offended your sensibilities. No need to get miffed. I'd suggest you run your tax business according to your standards and I'll do the same. Too bad our businesses are not located closer together. I'd rather send EIC clients to someone I know rather than to HRB. You jumped to lots of conclusions about my reasons. Most of your leaps are without merit and frankly poorly thought out. I don't assume most EIC claimants are cheats - I just don't want to accept the risks the IRS has placed on tax preparers in this regard. And just for the record, I did turn down all but two of the many FTHB inquiries I received. One was military (no way I'd turn down one of our heroes) and the other was a church member who also used another church member as their agent. I assume your inclusion of the AOC, Adoption Credt, etc was just a matter of piling on or perhaps getting carried away by emotion, since you are smart enough to know that the preparer risks are nowhere near as severe as the special and unique risks of the EIC. Plus those are items much easier to document satisfactorily without the risks and 4 pages of CYA. I run a business, not a social sevices agency or a counseljing service. Its my philosophy that good business practice always relies on the ability to make distinctions.