EITC Due Diligence Questions

[BP.]

Thank you for sharing the post BHoffman. Truly scary. I cannot imagine asking for, receiving and retaining most of the stuff mentioned. (Grocery receipts??) And to add to this: With incomes decreasing, and with the increase in income limits and number of kids to qualify for EIC, I have seen an increase in the number of people who qualify that did not previously qualify for EIC; takes me by surprise sometimes. But now that just increases the exposure/risk.

[Gretel]

Thank you, BHoffman. I am shocked. I am wondering if a "normal" married couple, both of them are the parents of their children, would need to be questioned that way and bring in proof every year. How ridiculous can this get? They think they are on a funny farm and not in an Accountant's office.

I have some of these "normally married" couple as EIC clients and did not even document anything in addition to the papers generated by my program.

[MLINDER42]

Eitc Due Diligence

I thought my auditor was off the wall he went over 133 returns in 7 hrs and 1 day.It was his rule as long as a copy the 8867's were signed he asked no other questions about EITC due diligence.He wanted proof of income on C's and CEZ' s only.If he had started asking questions as the other preparer mentioned I would have never been able to answer.Most of my clients were never married less divorced and lately it seems more of the father's end up with the child around here and the mother takes off.We do over 2200 returns and 75% are EIC. We would not be in business if it was not for EIC most of them would not have to file.I hope he wins the appeal and I offer to help him with his fight both with time and if he needs some financial help with that also.I am an EA and I expect to bring these points up at the IRS SEMINAR this summer.My email is mlinder42@gmail.com.

[BHoffman]

MLinder - very happy to hear from you! We have not heard from you since you said you were going to be seeing an auditor and hoped they hadn't carted you off in the white van

[MLINDER42]

Eic Due Diligence

The auditor was so bad that if my boss had not come in I was about to ask him to leave and come back when he understood the low end tax business.He did not know what a bank product was and asked where are receipts were for the payments we received from the taxpayer for prep.He asked me what we do when the child's name does not match the taxpayer or when the children have different last names.I explained in my area that is the normal.The preparer he was auditing has 3 kids all different last names none the same as hers.Plus I had 2 other preparers who told him the same thing that their children had different last names not the same as theirs.He just did not understand our area.I figured he had to write us up for something and my boss feels he can afford the $3300.00 fine.The preparer has not received the bill yet so we can pay it.

[Burke]

.We do over 2200 returns and 75% are EIC. We would not be in business if it was not for EIC most of them would not have to file.

That is absolutely amazing. I am so glad that is not my clientele base. If it were, I would not be in this business.

[MLINDER42]

Eic

That is why I have another practice from my home where I do about 200 returns of middle income taxpayers about half are local school teachers.My wife works in HR for the school system.It is a balancing act.The low end pays well and i do not do much in the off season.