Meeting your EITC Due Diligence in a nutshell (updated)

[JohnH]

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?

...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.

[jainen]

>>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.

[Jack from Ohio]

...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.

It seems that the stresses of the upcoming changes in the Tax Preparation Career field may be too much for you to handle...??

If you think being a tax professional is just putting in numbers for those clients you "approve of," then you and I are not in the same profession.

Would not want you to have a nervous breakdown worrying about the black helicopters with blue helmeted troops dropping it to observe your tax preparation activites....

[Jack from Ohio]

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?

Those things sound like common sense and ethical logic to me. I have been doing those things, without IRS mandate, for years.

[JohnH]

>>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.

You have your wish.

No need for the seasonal temp at IRS - you're now the seasonal temp...

[JohnH]

It seems that the stresses of the upcoming changes in the Tax Preparation Career field may be too much for you to handle...??

If you think being a tax professional is just putting in numbers for those clients you "approve of," then you and I are not in the same profession.

Would not want you to have a nervous breakdown worrying about the black helicopters with blue helmeted troops dropping it to observe your tax preparation activites....

No stress here, but you seem to be wearing yourself out jumping to conclusions on this thread.

As a matter of fact I DO only work for the clients I approve of - in that sense I suppose we apparently are not in the same profession. As I said before, good business practice relies on the ability to make distinctions.

[Jack from Ohio]

Anyone interested in my process for EIC documentation, send me a message and I will be glad to share.

I have the information compiled and ready to send. A few have messaged me their e-mail addresses and I have sent the information out. If you message me your e-mail address, I will send it to anyone who may be interested.

[kcjenkins]

And the easy way to do that is to just click on his pic, them select 'Send private message'

[kcjenkins]

Don't mean to seem too obvious, Jack, but a lot of members have never used the PM option, and never knew how easy it is to do that.

[Jack from Ohio]

The PM won't let me attach the files I want to send. Just click on my name, then choose to send me a message.

I just sent info to 5 more members.

Heading to the airport now...