In Uncategorized on 12/19/2011 at 18:07

In 27 Pages or Less

 IRS has come up with fresh regulations on the due-diligence requirements for preparers of EITC returns. See my blogpost “The $500 Misunderstanding”, 10/25/11.

In 27 pages, IRS says that (a) providers of generic information about EITC to walk-ins at a tax preparer’s office are not non-signing preparers and don’t have to worry about the $500 penalty; (b) a firm cannot be subject to the $500 penalty unless one of the following three conditions is satisfied: (1) a member of the principal management of the firm knew of the failure to comply with the due diligence requirements; (2) the firm failed to establish reasonable and appropriate procedures to ensure compliance with the due diligence requirements; or (3) the firm failed to comply with its reasonable and appropriate compliance procedures through willfulness, recklessness, or gross indifference; and (c) retention of EITC records no longer runs three years  from filing of the return (because the taxpayer may take the return from the preparer and file it themselves, and preparer cannot know when, or whether, taxpayer filed), but for the period ending three years after the later of the date the tax return or claim for refund was due or the date it was transferred in final form by the tax return preparer to the next person in the course of the filing process.

Simple, huh?

Oh yes, and the economic impact on preparers will be “minimal.”

Nit-pickers, obsessive-compulsives and terminal insomniacs may find the complete text at FR Doc. 2011-32487 Filed 12/19/2011 at 8:45 am; Publication Date: 12/20/2011.


  1. […] was originally posted in The Taishoff Law Firm blog on 12/20/2011 under the name of THE $500 MISUNDERSTANDING – PART DEUX. Share this:FacebookEmailPrintRedditDiggStumbleUpon  Posted by Steven at 11:18 am […]


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