What does it really mean?

[Questionguy101]

In the IRS "Auditing for Due Diligence Compliance" webpage:

http://www.eitc.irs.gov/rptoolkit/compliance/auditing/

The last Q&A is:

"Are You a Certified Acceptance Agent?

To reduce the burden on preparers, IRS combines the due diligence audits with certified acceptance agent visits as needed."


What does this exactly mean?

[Koss]

Certified Acceptance Agent

Acceptance Agents have special authority to review the identification documents that are associated with Form W-7, Application for Individual Taxpayer Identification Number.

BMK

[Questionguy101]

Acceptance Agents have special authority to review the identification documents that are associated with Form W-7, Application for Individual Taxpayer Identification Number.

BMK

So if the tax preparer being audited is also an acceptance agent, his procedure to perform the duty will be audited at the same time too.

But if the tax preparer being audited is not an acceptance agent, this Q&A has nothing to do with him.

Have I understood it correctly?

[Koss]

CAA Audits

That's how I would interpret it.

The acceptance agent program was recently revamped, with a lot of restrictions and limitations. There was a lot of fraud.

Most ITIN applications today are submitted by undocumented immigrants. There are other valid reasons for an ITIN. For example, a wealthy foreigner comes into the country on a tourist visa, and decides to buy real estate or purchase an interest in a business. He's not eligible for an SSN, but he's going to need an ITIN for certain transactions.

But most ITIN apps are submitted by undocumented immigrants. The CAA is supposed to review key documents such as a foreign birth certificate and driver's license, and that way the applicant doesn't have to send original documents to the IRS. A lot of applications were going through CAAs based on fraudulent documents. The CAAs were not always participating in the fraud; some were just too naive to recognize bogus documents, especially in a foreign language.

The CAA has to keep copies of the identification documents. That's what those audits are about.

BMK