IRS Proposes New EITC Checklist Regulations


Long held as one of the most controversial topics between IRS compliance sectors and the tax prep industry, the EITC checklist is facing the possibility of new requirements. In an effort to stem fraud and increase compliance, the IRS has proposed new regulations that would require tax prepares to file a due diligence checklist with any return claiming the Earned Income Tax Credit.

Originally instituted by Congress more than ten years ago, the due diligence requirements aimed to aid preparers in error checking and compliance when dealing with those returns claiming the earned income tax credit. Furthermore, the checklist (Form 8867) aimed to help maintain due diligence and ensure that all bases were covered when preparing these types of returns. Preparers have been required to keep these on file should the IRS wish to review them. Not only has this caused more paperwork and storage costs for preparers but in many cases it has proved to be quite a hassle.

While this new requirement may seem unjust or unwarranted for many in the industry, it is, in my mind, a good move for the IRS. Before you cast stones, hear me out on this. Assuming this regulation passes, the EITC checklist within the TaxSlayer Pro software would in all likelihood be efiled with the remainder of the return, therefore removing the record keeping burden from you the preparer. This seamless process would cause much less of a burden and put more of the responsibility of the process back where it belongs, on the tax payer.

For more information stay tuned to irs.gov. Comments on the proposed regulation are welcome until November 10th and a public hearing will be held on November 7th.