Another 8867 Post !!!

[Twin Turbo Z]

Trying to get a handle, on how to handle the new 8867 form. Most of it (to me) is straight forward. But question 3 & 5 are open to discussion. And I'm mainly focusing on the EIC and CTC/ACTC columns.

Question 3 : Answer yes to 3, only if you answer yes to 3a and 3b. All of our clients are people we have know for years and their kids and their grandkids (small town USA). It seems crazy to ask them for documents to prove their children are theirs and they lived with them !! I can see that for new clients whom we just met. My question is how are other preparers going to answer question 3, 3a and 3b in that situation ? If you didn't ask your client of 10 years any questions and you answer question 3 with "No", then you have not met the "Knowledge Requirement" and "Due Diligence". Am I correct in that assumption?

Question 5 : If I didn't ask questions of my client of 10 years, then of course I didn't document those answers !! So of course I would answer "No" to 5. So, have I meet the "Record Retention Requirement" ? Or is that a huge red flag !! I've searched this forum and others and some say the key words in question 5 is "if any" and they plan on answering yes in "All" situations.

Would be nice if the IRS would add a line that says "Preparer has known the taxpayers for years" and that would trump all other question on 8867

Any input on how other preparers are going to handle question 3 and 5 with long term clients is greatly appreciated.

[Twin Turbo Z]

Well from the other threads on this forum, I guess no one is 100% sure what to do. Or they feel secure enough in what records they keep. Guess we are going to develop a "eic/ctc/actc/aoc questionnaire" to give to all of our clients. Both new and long term. Let the client *****ing begin. Oh well... Hopefully Trump will do away with EIC and the CTC.

[August @ ADG Financial]

Questions 3 & 5

I for one think your reading too much into these questions. It would be easy to answer yes to all these question if you
have known your clients for a few years. If a client comes with a new baby and shows you a SS card make a copy for
your file. I think we all know when a person is trying to cheat the system. Just walk away from those clients. But please
don't read more into the question than there is.

[Twin Turbo Z]

I agree. After looking on EITC Central there is a Q&A page with question preparers have asked the IRS concerning these issues. One reply the IRS gave was having a signed and dated 8879 would suffice meeting the "from whom and when" you got the info. We have always scanned all documents given to us. But we are putting together a short questionnaire to help in this matter. Like I mentioned we personally know our clients (38 years doing this) and I cant imagine the headache of doing this in big cities. Thanks for the input.

[Kram BergGold]

Mt take

You know the 1099 question on Schedule C, well checking "no" does not get you audited. Just like checking the box, I have proof but it is not written on form 4562 does not get you audited. Granted, if IRS audits and proves you did not do, due diligence re the credits, there is a substantial fine, but if you know your client and the kid exists, is theirs, etc then if examined all will be well. I am not asking any long term client for proof about a kid. If I believed the kid existed in 2000 then I will believe the kid exists in 2017.

[Twin Turbo Z]

Got the questionnaire done. Should suffice and its only one page (front and back). Definitely time to raise our fees !!! Thanks to all that replied. Should be an interesting season.

[Super Mom]

Yet more costly paperwork for those who can often least afford it!

[Twin Turbo Z]

Yet more costly paperwork for those who can often least afford it!

That includes me !!!!

[FEDUKE404]

Low proof threshold for Form 8867 ??

You know the 1099 question on Schedule C, well checking "no" does not get you audited. Just like checking the box, I have proof but it is not written on form 4562 does not get you audited. Granted, if IRS audits and proves you did not do, due diligence re the credits, there is a substantial fine, but if you know your client and the kid exists, is theirs, etc then if examined all will be well. I am not asking any long term client for proof about a kid. If I believed the kid existed in 2000 then I will believe the kid exists in 2017.

With all due respect, the mere "existence of the kid" is only part of the overall issue, especially for EITC concerns.

FE

[taxmandan]

This is different

You know the 1099 question on Schedule C, well checking "no" does not get you audited. Just like checking the box, I have proof but it is not written on form 4562 does not get you audited. Granted, if IRS audits and proves you did not do, due diligence re the credits, there is a substantial fine, but if you know your client and the kid exists, is theirs, etc then if examined all will be well. I am not asking any long term client for proof about a kid. If I believed the kid existed in 2000 then I will believe the kid exists in 2017.

The IRS has formed special teams to visit tax offices to check compliance with the due diligence requirements on EIC, CTC & AOC. And like someone else mentioned, we really don't know what they consider sufficient dd to comply, and that's the hazard for us. Our liaison said this is a 'revenue generating' compliance check, which means they are looking for any excuse to assess penalties. Our liaison is on one of the teams, he is now tasked in enforcement and less for liaison duties.