The PATH Act of 2015 extended Form 8867, the Paid Preparer’s Due Diligence Checklist, to include not only claims for earned income tax credit (EITC), but also the child tax credit (CTC), the additional child tax credit (ACTC) and the American opportunity tax credit (AOTC) for the 2017 tax filing season. During a recent joint meeting, IRS representatives recommended that tax professionals access the IRS’ EITC Central and view the training module for clarification such as the definition of “interview” for checklist purposes. (A very general interpretation is that an interview can be conducted via written correspondence, email and telephone in addition to an in-person meeting.) There are substantial due diligence requirements under IRC section 6695 for preparers of returns containing these items and the IRS is vigorously enforcing compliance by preparers. The IRS can assess a penalty of $510 for each violation (indexed for inflation).
In addition, pursuant to the new law, refunds that include EITC or ACTC claims will be delayed until Feb. 15 to give the agency more time to screen the returns for fraud.