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IRS EITC Preparer Compliance Update

October 24, 2012

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The IRS is making changes to their ongoing EITC compliance efforts for the upcoming year. Beginning this month (October 2012), EITC return preparers that have been identified by the IRS as “at risk” for filing returns with EITC errors will receive compliance letters, educational visits, or be subject to a due diligence audit.

The IRS uses a risk-based scoring model to determine which preparers of EITC returns warrant one of the following types of actions from the IRS:

  • Soft Compliance Letter

    During October 2012 and November 2012 the IRS will be mailing 3,000 compliance letters to new and low-to-medium risk EITC preparers. These preparers were chosen to receive these letters because the IRS, in reviewing their Tax Year 2011 EITC returns, observed that these returns have a high likelihood of EITC errors.

    These letters are designed to inform the preparer of:

    • Their due diligence requirements; and
    • The consequences if they continue to file inaccurate EITC returns.
  • Knock and Talk (Educational Visit)

    During December 2012, the IRS will conduct 100 educational visits to preparers whom the IRS has identified as filing highly questionable Tax Year 2011 EITC returns. The objective is to ensure that the preparers understand the type of errors that they have made and to improve the accuracy of each preparer’s EITC returns.

    No penalties are assessed during these visits; however, the IRS will monitor the EITC returns filed by these preparers during the upcoming filing season. If the accuracy of their EITC returns does not improve, the IRS will perform a due diligence audit on the preparer during the 2013 Filing Season.

  • Due Diligence Audit Visit

    Due diligence audits are performed on preparers whom the IRS has identified as being at the highest risk of preparing questionable EITC returns.

    The IRS performs due diligence audits as follows:

    • Pre-Filing Season

      Beginning October 2012 through early January 2013, the IRS will perform 600 due diligence audits on EITC preparers on their Tax Year 2011 EITC returns.

    • Real-Time

      During the 2013 Filing Season the IRS will perform 400 due diligence visits based on Tax Year 2012 EITC returns.

Learn more about the IRS EITC preparer compliance program.

To learn more about how to meet EITC due diligence requirements see the IRS Due Diligence Training Module on the IRS EITC Central website.

To learn more about how to meet EITC due diligence requirements for EITC returns that include a Schedule C see the IRS EITC Schedule C and Reconstruction Training Module on the IRS EITC Central website.

To view IRS video clips on various aspects of due diligence see the
Due Diligence Video Clips
page on the IRS EITC Central website.

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