Due Diligence Requirements
The information on this page explains the tax law by describing the due diligence
requirements that assist you in determining whether or not a client is eligible for
the EITC.
The Taxpayer Relief Act of 1997 added code section 6695(g), which requires preparers of Federal income tax returns or claims for refund involving the earned income tax credit to meet the due diligence requirements. Failure to do so could result in a $100 penalty for each failure. The rules for 2000 returns are:
You must complete Form 8867 (Rev. December 2000), Paid Preparer''s Earned Income Credit Checklist (or your own form as long as it provides the same information).
You must complete the EIC Worksheet in the Form 1040, 1040A, or 1040EZ Instructions (or your own worksheet as long as it provides the same information as the 1040, 1040A, or 1040EZ worksheet(s)).
You must have no knowledge, or have reason to know, that any of the information used to determine your client''s eligibility for, and the amount of, the EITC is incorrect and you must ask the client if the information appears incorrect.
- You must keep the following information for 3 years:
- The completed Form 8867 (or your own form), and;
- The EIC worksheet (or your own worksheet), and;
- A record of how and when the information used to determine eligibility for and the amount of, the EITC was obtained by the preparer.
Promotional/Informational Materials View EITC 2001 Tax Professional Kit in PDF (Pub. 3107, rev. 12/00) 1195K - This publication contains information for return preparers, including guidance to help you determine the eligibility of your clients, due diligence responsibilities, and answers to frequently asked questions.
The following EITC promotional/informational items are available for
your business needs. These products are too large for download.
Paper copies are available by calling 1-800-829-3676.
Earned Income Tax Credit
- Publication 1622, EITC brochure
- Publication 3211, EITC Q''s & A''s Brochure
- Publication 962, EITC Stuffer
- Publication 1495, EITC Poster (8½" x 11")
- Publication 3523, EITC in a Nutshell Poster (8½" x 11")
- Publication 3524, EITC Eligibility Checklist Poster (11" x 17")
- Publication 3170, Drop-in Ad Package for Various Tax Credits
- Publication 3522, 2001 EITC Tax Professional CD-ROM
- Publication 1830, 2001 EITC Sell-in Sheet
- Publication 3709, Foster Child Eligibility Poster
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