Question

The following are all due diligence requirements a Tax Professional must meet for a taxpayer claiming EITC, AOTC, and CTC/ACTC EXCEPT:

Maintain a copy of documents provided by the taxpayer that the Tax Professional relied on when determining eligibility for the credit. Record the date the information was obtained and the name of the person who provided the information.

Complete all worksheets used to compute the credit. Worksheets completed by hand must be kept in the taxpayer's client file.

When information provided by the taxpayer appears to be incorrect, inconsistent, or incomplete, the Tax Professional must make additional inquiries to determine if the taxpayer is eligible for the credit. Then document both the questions asked and responses provided.

Investigate and verify the accuracy of information the taxpayer provides to show eligibility for EITC, AOTC, and/or CTC/ACTC.

Answer 1

Due diligence requirements which a tax professional must consider are as follows:

• Complete and submit the form 8867 along with the checklists to claim exemptions (EITC, AOTC etc)
• Complete all worksheets document appropriate refunding credits .
• He should also keep the working papers of the comutations for future references.
• He should have good knowledge of laws related and should ask only relevent questions from the tax payer for the computations.
• He should not ignore any information which is incorrect on the path of tax payer. Rather he should make additional inquiries to reach the desired and relevant information to conclude the eligibility.
• He should also keep the records for additional inquiries done for better presentation.
• He should keep all the records, documents related and should comply with the due diligence requirements.
• Records can be kept in both paper and electronic form and should be kept in a secured place to maintain the confidentiality of the tax payer.

Thus option (d) is incorrect to investigate and verify the accuracy of information.