New page 4 -- revised form 8867

[Bees Knees]

Great post with a follow up question since I am in the same situation as you. Having done these returns for 10 years and knowing parents and children personally I refuse to ask any additional question, why would I if the proof hops in front of my eyes? I would fight any IRS to the blood any this. I am not doing any EIC returns for clients any more that do not live in a "classical" father, mother, child(ren) situation.

Check the "Other" Box (box l) with an explanation when you know the client. Simply explain that you know the parents and the kids personally. No need for any documentation when you have personal knowledge of the circumstances that go beyond the normal client/preparer relationship. The knowledge requirement is satisfied when you KNOW the family personally.

Reg. §1.6695-2(b)(3) says a tax return preparer must make reasonable inquiries if a reasonable and well-informed tax return preparer knowledgeable in the law would conclude that the information furnished appears to be incorrect, inconsistent, or incomplete. It goes on to say that you must document the reasonable inquiries made. Thus if a reasonable and well-informed tax return preparer knowledgeable in the law would conclude that the information furnished appears to be correct, due to the fact that the tax return preparer has personal knowledge of the family and their circumstances, then there is no requirement to document that knowledge. The regs only mention the documentation requirement when you have reason to believe there is something wrong.

That's my opinion and that's what I intend to do.

[Dusty2004]

No due diligence

give the client a blank copy; have them fill it out and sign it; input the info into the tax return and retain the signed copy in your client file

Taxea:

I feel, if you do this in the manner you described, you will not have done your due diligence. You need to make reasonable inquiries and to see, and keep a copy of, the documents that were used by you to verify this information. If not you are subject to the fines.

Dusty

[S T]

Fortunately for me ---- as a preparer ---- I have few of these EITC returns - so I will be under 10 EITC filings for a year and most of those are going to be that age 25 - 65 group - single no children - just maybe have a difficult time with the economy and not working much - I think I had only 3-4 for 2011 tax filings.

Bee's post was important to me in case I do encounter - so I will check other - maybe ask for some unpdated documents - Both my "Singles" and "my Family Groups" have been long time clients of mine - over 10 years or more

So if IRS wants us to "audit" returns - guess that is what we do. Due Diligence, request paperwork- if required- not just having the client complete the 8867 form and sign - that really is no verification (exception possible - to our knowledge on long term client relationship)

Personally I would rather not to have to complete any Form 8867 and claim EITC - however the upcoming filing season will let us know as we prepare the returns

I appreciate the information on this subject that is being posted- Thanks to all!

Sandy

[mlinderEA]

8867

You must read the answers to the 8867 and judge if they make sense.If not ask more questions and document the questions and answers.I am waiting for the results of the audit of a preparer.The agent will be back on 12/18/2012 and I will see what I will do.The new 8867 just puts into writing what they wanted us to do all along.