Preparer: Stuart. Welcome aboard. Glad I found you at the last minute.
Stuart: Thank you, Sir. I¡¯m ready to shine.
Preparer: Well, we have a full day, but before we begin, did
you go over those EITC training materials I sent?
Stuart: Oh yeah, those were a breeze, for me.
Preparer: So, you feel up to speed on conducting a thorough interview to establish head of household status, and EITC eligibility? And you know the four qualifying child tests¡ªrelationship, age, joint return and residency?
Stuart: I am all over this.
Preparer: What about proper documentation?
Stuart: Did I mention I have a college degree?
Preparer: What are you looking at?
Stuart: You can¡¯t, you don¡¯t, you can¡¯t see the¡ people?
Preparer: No¡ Look let¡¯s get going. Your first client will be here any minute.
Stuart: It¡¯s looking pretty good, huh?
Preparer: Stuart, I¡¯ve been spot checking your files.
Stuart: As you can see, I got this down.
Preparer: That¡¯s not what I¡¯m seeing. I¡¯m wondering if you¡¯ve done your due diligence. You know, the IRS now has a $500 penalty, so if you don¡¯t practice due diligence, Stuart, you could be fined. As your employer I can be fined for your negligence. And our clients could face penalties too. So, let¡¯s go over a few things to keep our finances and reputations intact.
Preparer: Mrs. Romero.
Stuart: Ah, lovely. You know I really think she liked me.
Preparer: Where is the proof that her daughter lived with her more than 6 months last year? No records, no residency requirement, no EITC.
Stuart: Well, I got distracted, you understand.
Preparer: And Alice Jackson. Where¡¯s the documentation that proves her adjusted gross income is greater than her son¡¯s. She¡¯s the grandparent. What¡¯s the dad¡¯s income?
Stuart: She qualified last year, so obviously she¡¯s good to go this year.
Preparer: You know, Stuart, I shouldn¡¯t have taken it for granted that you truly understood those training materials. EITC eligibility is complicated. Let¡¯s go over Form 8867, the paid preparer¡¯s checklist. It¡¯s been updated, so it¡¯s worth a careful look.
Preparer: We must complete and submit the 8867 with each tax return. If you work the form and document as you go, that¡¯s due diligence.
Stuart: C¡¯mon, you¡¯d have to spend like an hour with every client!
Preparer: Whatever it takes to get it right. Now the law requires that we make a copy of the 8867, and all the documentation we relied on to determine EITC eligibility. We¡¯re also responsible for keeping this record a minimum of¡
Stuart: I know, one whole year.
Preparer: THREE years, Stuart. From the date the return was e-filed; or from the date you gave it to the client for signature; or from the due date of the return, whatever is later. And the IRS prefers not paper files, but secure electronic storage to reduce the chance of identity theft.
Stuart: Wow, this IS sort of hard!
Preparer: Yes, Stuart. due diligence is hard, but worth it for our protection and our clients.