Watch Those Earned Income Credit Claims

The IRS has notified tax preparers that they are on the lookout for fraudulent claims on the Earned Income Tax Credit.  Tax preparers with a number of questionable credit claims are notified that numerous errors have been found and that the IRS will be monitoring the claimed credits by the preparer going forward.  In addition, the letter reminds preparers of due diligence responsibilities and provides a toolkit for the credit.

Generally, EITC will come into play with self-prepared returns (including TurboTax or TaxCut), returns of commercial preparers such as H&R Block or Jackson Hewitt, small to medium RTP businesses and small EA or CPA firms; only rarely would even a medium-small CPA firm be preparing an Earned Income Credit.  Nevertheless, with tax preparer registration now a staple; it is important not to run afoul of the IRS here.