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This is the way the IRS puts its burden of doing their job onto the tax preparer. We are essentially auditing the income and expenses of the client and being held responsible if something does not turn out correctly. Small wonder that there are preparers who would shy away from doing these returns. They put a number of subjective elements into the presentation - 'Apply a common sense standard to the information provided by your client - Evaluate whether the information is complete and gather any missing facts - Determine if the information is consistent; recognize contradictory statements and statements you know not to be true These are the kinds of instructions that are int the IRS audit guidelines. The IRS should not be allowed to put such a heavy onus on the preparer and a tax preparer protest is in order. If they succeed in this, what comes next? What new area will they impose on us?

>>IRS could successfully turn the tax preparation community into an uncompensated extension of their auditing function<< What silly nonsense! Show me one place where the IRS ever said you have to verify anything. Not on Form 8867, that's easy to see. But IF you don't have enough information to determine eligibility, then find out. Just by ASKING, not looking at school records or business receipts. And obviously you have to write it down If it isn't already on the organizer--same as basis or property tax or anything else. Do you invent numbers for your clients? Of course not, and you sure don't want the client telling IRS (or a judge), "I never said that--my preparer made it up--now I know why he promised me a big refund." Which happens to be the first thing a client WILL tell the IRS (or a judge). As for data entry, I haven't heard that whine in years. We enter the data so it's accurate, and we don't want some seasonal temp at IRS retyping it.

...what comes next? What new area will they impose on us? Interesting questions - here's a suggestion: Maybe they will decide that refusing to prepare a return claiming EIC is unprofessional; maybe even write that into Circular 230. What would the penalty be? Well, they always have the option of refusing to renew your PTIN if you don't comply... You may think this is far-fetched, but I don't think so. Not many years ago I would have argued with the idea that IRS could successfully turn the tax preparation community into an uncompensated extension of their auditing function. Yet in the space of just a few years, first they turned you into a pretty good data entry clerk. Now you're doing a pre-audit of every return you prepare. And judging from the comments I read on this forum and others, the primary focus of many preprers is making sure IRS is pleased with their work.

NSTP 1040 update. Two days, 8 hours each day. Learn every year, 16 CPE including 2 Ethics. One stop shop. Our Professional Tax Preparer organization sponsors it every year. Usually 50-60 in attendance. Cost for members - - $225 and that includes 2 delicious lunches.

>>Evaluate whether the information is complete and gather any missing facts. Determine if the information is consistent; recognize contradictory statements and statements you know not to be true<< How is that even a tiny bit different from what you have to do with ANY other issue? Compare it to Circular 230 Section 10.34 Standards with Respect to Tax Returns, "The practitioner may not, however, ignore the implications of information furnished to, or actually known by, the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete." In other words, tax preparation is a professional activity, not simply a clerical function of filling in forms.

Several have responded to me. I will package an e-mail with attachments and a detailed list of what we do. Those that have already responded, please be sure to send an e-mail address for me to reply to. More than happy to share the tools I use.

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.

The only way to end EIC fraud is to end the EIC.