The IRS is focusing heavily on EITC Preparer Audits resulting in heavy penalties. In addition to assessing $500 per return, you can also face:

  • Suspension or expulsion from the IRS e-file program
  • Other disciplinary action by the IRS Office of Professional Responsibility
  • Injunctions barring you from preparing tax returns or imposing conditions on the tax returns you may prepared

You can prepare your firm before an audit.

  • Is your Due Diligence complete?
  • Do you have copies of all documents relied on?
  • Did you take a reasonable position on the returns?

If the answers are NO, you can get ahead of the issues before they turn into huge penalties for your firm and your preparers.

What should you do?

Review the IRS guidelines. Look at your files to see what is missing. Determine WHY the preparer may have allowed income items or dependents without sufficient documentation. Be prepared to defend your position and documentation contemporaneously. The IRS will not allow you to come back after the audit is complete to supply documentation.

Have you already had your EITC Preparer Penalty audit? Are you being fined $500/return?

You can Appeal. Fines over $25,000 require a formal protest letter. The preparer will be required to meet with the Appeals officer to explain the EITC Due Diligence errors.

Remember- lack of knowledge about the requirements, good cause, and intent are NOT defenses to IRC §6695(g)!

Don’t Pass the Blame

A crucial mistake is made when preparers tell the auditor or appeals officer that they weren’t trained correctly or they were following their office policy. The penalties do not go away. The IRS can choose to assess the FIRM and even the FIRM OWNER personally.

Once You Are Assessed EITC Preparer Penalties

You may have options to fight the liability even if you are not successful in Appeal. A competent Tax Attorney will be able to assist you with exploring your options after assessment.

We represent preparers and firms in defending EITC IRC §6695(g) and other IRC §6695 Preparer Penalty audits and appeals. We work with preparers throughout the United States to provide EITC preparer penalty defense, appeal, and audit readiness. Contact us today to discuss your case.

We can help you immediately.

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