Diligence

[Earl]

Taxpayer brings completed tax return to you to e-file. The return shows taxpayer to receive EIC. You have to reenter the return in your program in order to e-file.
Do we have to comply with due diligence the same as if we originated the return.

[JoshinNC]

Would you be considered the preparer under Circular 230?

Taxpayer brings completed tax return to you to e-file. The return shows taxpayer to receive EIC. You have to reenter the return in your program in order to e-file.
Do we have to comply with due diligence the same as if we originated the return.

What do the due diligence requirements say about preparers?

[taxea]

The way I do this is to actually prepare the return and if the figures match those that the TP shows on his prepared copy I mark the return as self-prepared with me as e-filer. You are not responsible for what the TP did. If the figures don't match then the TP made an error on the return, in which case, you would not file it but rather advise the TP the return has errror/s and determine whether TP wants you to prepare the return correctly for which you charge your normal price. If he says no...charge him for your time and return the incorrect return to him. You may not be responsible for the 8867 but you are responsible to file a correct return.
If you prepare a correct return then you are responsible for the 8867 and I would give the TP a blank copy to fill out and sign for my file. This proves that you were provided with the information on the 8867 from the TP.

[FEDUKE404]

Due diligence issues

The way I do this is to actually prepare the return and if the figures match those that the TP shows on his prepared copy I mark the return as self-prepared with me as e-filer. You are not responsible for what the TP did. If the figures don't match then the TP made an error on the return, in which case, you would not file it but rather advise the TP the return has errror/s and determine whether TP wants you to prepare the return correctly for which you charge your normal price. If he says no...charge him for your time and return the incorrect return to him. You may not be responsible for the 8867 but you are responsible to file a correct return.
If you prepare a correct return then you are responsible for the 8867 and I would give the TP a blank copy to fill out and sign for my file. This proves that you were provided with the information on the 8867 from the TP.

WOW - simply wow !!

The Form 8867 IS part of the tax return, and then there is that nagging little item in Circular 230 about the requirement for any preparer to notify a client of errors noted and possible consequences of / solutions to those errors.

For any number of reasons, playing the old ostrich with the head in the sand trick might not be a prudent move for any professional tax perparer.

While you/your lawyer may be able to argue you did not "prepare" the return, why risk the bother?

FE

[David1980]

From the 8867 instructions,

Only paid preparers have to complete this form. The form must be submitted with the tax return of any taxpayer claiming the earned income credit (EIC) if a preparer was paid to complete the return.

So it doesn't seem like the 8867 is relevant with self-prepared returns. That said, it might look a little suspicious if all the tax returns you as an ERO send that have EIC are "self prepared".

[JohnH]

I guess you'd be OK as long as you charged at least $500 to e-fling the return.
That way you would break even on it if a problem comes up.
Without the $500 fee, it might be wise to send them to HRB or JH since they have the deep pockets.

[taxxcpa]

Without the $500 fee, it might be wise to send them to HRB or JH since they have the deep pockets.

I suspect the IRS is not likely to impose many penalties on HRB or JH. If they drove the big tax shacks out of business with EIC-related fines, it would scare the independent tax preparers so much that they would anticipate a $ 500 fine per EIC return, in which case, they would have to charge their regular fee plus $500 extra for every EIC return. Without a RAL or similar gimmick, it would make it difficult for EIC-claimants to get a return done.

I just did a dummy return that had the income, etc. that implied an EIC would be due. I left all EIC information unanswered. I did not check the "no" box indicating that the return was not qualified for an EIC, but the software created a Form 1040 with "NO" beside the space for the earned income credit.

In the past, I've checked the "no" box and the client was later contacted by the IRS telling him he might be entitled to the EIC. He preferred to forego it rather than to go through the hassle for what, in his case, was a very small credit.

[WhiteOleander]

I suspect the IRS is not likely to impose many penalties on HRB or JH.{snip}

This is not accurate. Block has been hit with the preparer fees. They are fighting them.

[mlinderEA]

Diligence

Spoke to the head of EIC DUE DILIGENCE at the IRS FORUM in NY according to her there are no self prepared returns when it comes to due diligence you are still totally responsible.Just finished EIC audit for one of my preparers auditor said the same thing if your PTIN is on the return your are responsible for due diligence.I did not due any self prepared returns last year we just took the original information add did the return ourselves told the client they wasted their money doing it themselves or paying some one else to do them.Have enough problems will not do EIC return for any less than full price.If they take bank product average about $225.00 per return.

[Earl]

Spoke to the head of EIC DUE DILIGENCE at the IRS FORUM in NY according to her there are no self prepared returns when it comes to due diligence you are still totally responsible.Just finished EIC audit for one of my preparers auditor said the same thing if your PTIN is on the return your are responsible for due diligence.I did not due any self prepared returns last year we just took the original information add did the return ourselves told the client they wasted their money doing it themselves or paying some one else to do them.Have enough problems will not do EIC return for any less than full price.If they take bank product average about $225.00 per return.

Why would you have your PTIN on return if you are not signing the return but just e-filing it. Or if you complete for family member and do not charge you would not sign the return and, therefore, no PTIN would be required.