14d • General discussion
8867
Tax Preparer Due Diligence
📚 TAX PREPARER EDUCATION: DUE DILIGENCE MATTERS
Due diligence is more than checking boxes in tax software. As a paid tax preparer, you are responsible for asking appropriate questions, reviewing the information provided, and following up when something appears incorrect, inconsistent, or incomplete.
The IRS requires specific due diligence when determining eligibility for:
✅ Earned Income Tax Credit (EITC)
✅ Child Tax Credit / Additional Child Tax Credit / Credit for Other Dependents
✅ American Opportunity Tax Credit (AOTC)
✅ Head of Household filing status
The 4 Key Due Diligence Responsibilities:
- Complete and submit Form 8867 – Paid Preparer’s Due Diligence Checklist when required.
- Complete the appropriate worksheets or calculations for applicable credits.
- Meet the knowledge requirement — don't ignore information that doesn't make sense. Ask reasonable follow-up questions and document the answers.
- Maintain required due-diligence records for 3 years, including Form 8867, applicable worksheets, documents relied upon, and records of additional questions and answers.
⚠️ Important: Tax software does not replace a preparer's professional responsibility. If information appears questionable, incomplete, or inconsistent, additional questions may be necessary before the return is completed.
Protect your PTIN. Protect your business. Protect your clients.
Education + Documentation + Compliance = A Stronger Tax Professional
Fresh Start Pro Tax Academy / Tax Nation
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8867
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