EIC Due Diligence Workflow for Paid Tax Return Preparers

The IRS states that paid preparers must complete Form 8867 for covered claims and meet knowledge, inquiry, calculation, submission, and recordkeeping requirements. The IRS page should be checked for the current tax year before the firm updates its procedure.

This operational guide is not tax advice. A qualified preparer should apply current law and instructions to each taxpayer's facts.

Use neutral questions about residency, relationship, age, support, income, filing status, and other relevant facts. Preserve who provided each answer, when, and through which channel.

When information appears incorrect, incomplete, or inconsistent, ask reasonable follow-up questions and request appropriate documentation. Do not let an automated organizer suppress the need for professional judgment.

Keep the completed checklist, worksheets, documents relied on, notes of follow-up questions and answers, preparer identity, reviewer action, and filing record according to current requirements. Protect these materials under the firm's security program.

Use blocking exceptions for unresolved eligibility or inconsistent facts. Only an authorized preparer or reviewer should clear them.

Train preparers on the firm's questions and escalation rules, review work regularly, and examine recurring errors. The IRS also describes employer responsibilities when employees fail to meet due diligence requirements.

Update forms, instructions, scripts, and retention rules each year from current IRS primary sources.