The due diligence stipulation was passed in Congress more than ten years ago. It was put in place to lessen error on tax returns that claim the EITC. These are generally prepared by tax professionals.
The 8867 Form, or Paid Preparer’s Earned Income Credit Check-list, was developed by the IRS in order to assist preparers in verifying eligibility information from taxpayers. Preparers must keep copies of these forms or other documents in case the IRS needs to review them. Beginning January 1st, 2012, the 8867 Form will need to be filed with every tax return claiming the EITC.
REG-140280-09 will provide more information on this requirement. Taxpayers who wish to comment on this regulation must do so no later than November 10th, 2011. A public hearing on the matter will be held on November 7th, 2011.
The Earned Income Tax Credit is available to low and moderate income taxpayers and their families. The benefits are based on income, family size and filing status. The EITC is refundable and taxpayers can receive the credit even if they don’t owe taxes. The maximum credit is $5,751 for the 2011 tax year.
One in five taxpayers will be able to claim the EITC, but many of them incorrectly figure the amounts or find out they don’t qualify. The IRS is taking this new step to make sure the credit is offered to taxpayers who are eligible. More than 26 million taxpayers got $59 billion in EITC in 2009 alone, and nearly 66% of those returns were prepared by professional tax preparers.