Check System
Send us your comment!

Your comment will be read by our web staff, but will not be published.

Please do not enter any personal information. Your comment is voluntary and will remain anonymous, therefore we do not collect any information which would enable us to respond to any inquiries.

However, provides a How to Contact the IRS page where you will find guidance on where to submit specific questions.

Share this presentation
Copy and paste the following URL to share this presentation
To email a link to this presentation, click the following:
This program writes a small 'cookie' locally on your computer when you set a bookmark.
If you want to utilize this feature, check the following checkbox. Otherwise, bookmarks will be disabled.
This is an IRS
audio presentation.

To view this page, ensure that Adobe Flash Player
version 10 or greater is installed.

Get Adobe Flash player

Slides PDF

Thank you so much. I see it is the top of the hour. So for those of you just joining, welcome to today's webinar, Answering Your Frequently Asked Questions about Due Diligence. We're so glad you're joining us today. My name is Evette Davis, and I'm a Senior Stakeholder Liaison with the Internal Revenue Service, and I will be your moderator for today's webinar, which is slated for approximately 60 minutes. Before we begin, if there's anyone in the audience that's with the media, please send an email to the address on the slide. Be sure to include your contact information and the news publication you're with, our media relations and Stakeholder Liaison staff will assist you and answer any questions you may have. As a reminder, this webinar will be recorded and posted to the IRS video portal in just a few weeks. This portal is located at Just please note that continuing education credit or certificates of completion are not offered if you view any version of our webinars after the live broadcast.

Again, we hope you won't experience any technology issues, but if you do, this slide shows helpful tips and reminders. We've posted a technical help documents you can download from the material section on the left side of your screen. It provides the minimum system requirements for viewing this webinar along with some best practices and quick solutions. If you completed and passed your system check and you are still having problems, try one of the followings. First, close the screen where you're viewing the webinar and relaunch it. Second, click on settings on your browser viewing screen and select HLS. You should have received today's PowerPoint in a reminder email, but if not, no worries folks. You can download it by clicking on the materials dropdown arrow on the left side of your screen as shown on this slide. As mentioned during our in case you missed a segment, you can download the resource document for the Annual Filing Season Program as well from that same dropdown menu. Closed captioning is available for today's presentation. If you're having trouble hearing the audio through your computer speakers, please click the closed captioning dropdown arrow that's located on the left side of your screen. This feature will be available throughout the webinar. If you have a topic specific question today, please submit it by clicking the ask question dropdown arrow to reveal the text box. Type your question in the text box and click send. This part is very important, folks. Please do not enter any sensitive or taxpayer specific information in that box. During the presentation, we'll take a few breaks to share knowledge-based questions with you. At those times, a polling style feature will pop up on your screen with a question and multiple choice answers. Select the response you believe is correct by clicking on the radio button next to your selection and then click submit.

Now some people may not get the polling question and this may be because you have your pop up blocker on. So please take a moment to disable your pop up blocker now so you can answer the question. We've included several technical documents that describe how you can allow pop up blockers based on your browser that you're using. We have documents for Chrome, Firefox, Microsoft Edge, and Safari. Now Safari is for the Mac users. You can access them by clicking on the materials dropdown arrow on the left side of your screen. We're going to take some time and test the polling feature right now. Here's your opportunity to ensure your pop up blocker is not on so you can receive the polling question throughout today's presentation. Okay folks, here's the question. Have you ever downloaded an IRS national webinar recording from the video portal?

Select A if the answer is yes; B, if the answer is no; or C, where is that video portal?

Hopefully that's not your choice, but if it is, please take a moment and click the radio button that corresponds to your answer. Have you ever downloaded an IRS national webinar recording from the video portal? A, yes; B, no; or C, where is the video portal? Okay, just want to make sure and give you a few seconds so that you can make your choice. Okay. All right, let's go ahead and stop the polling now and let's see how the majority of you responded. Let's see, what is that percentage? What percentage of you responded A, B, or C? Okay, so it looks like 65% of you responded no that you have never downloaded an IRS national webinar recording from the video portal, and that's okay. We hope that you receive the polling question and that you were able to submit your answer. If not, folks, now is the time to check your pop up blocker. Just to make sure you turned it off. Again, we've included several technical documents that describe how you can allow pop up blockers based on your browser that you're using. Just click the materials, drop down arrow on the left side of the screen to download your browser document. Again, folks, welcome and thank you for joining us for today's webinar. Before we move along with our session, let me just make sure you're in the right place. Today's webinar is all about Answering Your Frequently Asked Questions about Due Diligence and the webinar is scheduled for approximately 60 minutes from the top of the hour. I'd like to take a moment now to introduce today's speaker, Christine Bass. Christine is a Senior Program Analyst in the Return Integrity and Compliance Services, and she specializes in due diligence for return preparers. So you've got a great one on you here today, folks. She's been with the IRS for 33 years in various roles from a revenue agent to return classification specialist to program analyst. And with that folks, I'm going to turn it over to Christine to begin the presentation. All right, Christine, the floor is yours.

Great. Thank you so much, Evette. And fun fact, as of tomorrow, I will be starting on my 34th year at the IRS. So I've been here a long time and done a lot of things. And again, I appreciate you all for joining the seminar today. Today our seminar will discuss your due diligence requirements when completing and submitting tax returns for your clients claiming the Earned Income Tax Credit, EITC; the Child Tax Credit, Additional Child Tax Credit, Credit for Other Dependents are known as CTC, ACTC, and ODC; the American Opportunity Tax Credit, AOTC; and finally that Head of Household HOH filing status. In addition, we're going to review some due diligence documentation requirements. We'll also cover the penalty for not meeting your due diligence requirements, share when and how the IRS contacts paid tax preparers regarding due diligence issues and review some Frequently Asked Questions that the IRS gets about due diligence requirements. And finally, before we end our time together, I'm going to share some information on resources available to assist you and perfecting your due diligence skills. So if that all sounds good. Let's begin. So to begin with, I have an open-ended question for you, and that is, what does due diligence mean to you? And as I go through the different topics, I would like you to keep that question in your mind and compare what you think due diligence is versus what we discuss today. Now let's begin. Treasury Regulations Section 1.6695-2 describe the four due diligence requirements. A paid tax return preparer must meet when preparing a return or claim for refund, which includes that Earned Income Tax Credit, Child Tax Credit, Additional Child Tax Credit, Credit for Other Dependents, the American Opportunity Tax Credit and/or that Head of Household filing status. A paid tax return preparer can face potential penalties for not meeting the due diligence requirements. And a firm, a firm employing a preparer can also be subject to penalties for an employee's failure to follow due diligence rules. So where does the IRS's authority to assess due diligence penalties against paid preparers come from? Well, it's under Section 6695(g) of the Internal Revenue Code, which provides that paid preparers who fail to comply with the due diligence requirements as specified in the regs they'll pay a penalty of $500 for each failure to determine a client's eligibility to file as Head of Household or eligibility for or the amount of EITC, CTC or AOTC. So that's four different tax benefits. And the penalty amount adjusted for inflation is going to be $600 per failure for returns and claims filed in 2024. And I need to be very clear here in 2024, if you prepare return claiming all four of the applicable tax benefits and you fail to meet the due diligence requirements for all four of them, the IRS may assess a penalty against you of $600 per failure or $2,400 per return. And that's a big number. So let's discuss the specifics so you'll be ready when tax season comes.

And it's coming right around the corner as you all know. So we'll start by looking at each of the four due diligence requirements. The most important one is the knowledge requirement. And what does the knowledge requirement mean? Well, it means a paid preparer must not know or have reason to know that any information used to complete the tax return is incorrect, incomplete, or inconsistent. And you may be thinking, well, how would I know? Well, you need to make sure to ask your clients the right questions or in other words, relevant questions to establish if they are eligible to claim the credits and/or that Head of Household filing status. And what if you think the responses your client provides seem incomplete? Well, you should rely on your education, experience, and interview expertise to determine if the information your client is giving you again appears to be incorrect, incomplete, or inconsistent. And if it is, you must continue to ask additional questions until you are comfortable with the information provided. In other words, apply what we call a common sense standard to make sufficient inquiries to clarify any questionable information and contemporaneously record those questions as well as your client's responses. And you hear, heard me emphasized contemporaneously very important that you do it at the time that you're asking those questions, write them down and write down your client's responses. Now let's talk a little bit about due diligence documentation. Some paid tax preparers have shared that they're uncomfortable asking the probing sometimes sensitive questions to meet their due diligence knowledge requirements. If you have this concern, you may consider sharing with your clients one of the forms the IRS sends out during an audit, such as the Form 886-H-EITC documents you need to send to claim the earned income credit on the basis of a qualifying child or children. And that's available in both Spanish and English on This form lists the documents needed to verify eligibility to claim the Earned Income Tax Credit and may help your client have a better understanding as to why you are asking questions. So let's talk about the record retention requirement. You should record each question asked and the responses your clients gave you. As I mentioned earlier, that must be contemporaneously, if your clients provided documents that you relied upon to complete their tax return, claiming the credit and/or that HOH filing status. You must keep a copy of the documents as well as the questions and answers you asked. You may document this information manually on paper or electronically and keep it for at least three years, and it would also be a good practice to advise your clients to keep their supporting documents for three years after the return due date. Now, Evette, I believe it's time to do a polling question and this is one of our most Frequently Asked Questions. Awesome, awesome. Yes, Christine. Okay. This is excellent and I love, love, love this topic. We got a lot of great questions coming in to the Q&A, folks keep it coming. Keep it coming. Keep it coming.

All right, audience, here is our first polling question. Is a paid tax preparer required to request documentation if the client is a grandparent claiming Earned Income Tax Credit for their grandchild? Is the answer A, yes? Documentation is always required; B, no, but the preparer must make additional inquiries if responses to probing questions do not appear to be correct, consistent and complete; is the response C, no grandparents are never required to provide the supporting documents or is it D, yes but only if they are new clients. Okay, folks, think about what you just heard from Ms. Christine. Think about what you already know. How do you practice right now? Take a moment, click on the radio button that best answers the question. I'm just going to give you just a few more seconds to make your selection. This is definitely one of those Frequently Asked Questions. And folks, let me just tell you off the top, we're going for 100% here, a 100% of correct answers. So let's go ahead and stop the polling now and we'll share the correct answer on the next slide. And the correct response is B, no, but the preparer must make additional inquiries if responses to probing questions do not appear to be correct, consistent and complete. Okay, Christine, looks like we've got a little bit of work to do here. I see that 34% responded correctly. Can you help them out and tell them why or clarify why B is the correct answer? Sure, no problem. Thank you. Again, we're going to clarify this and the preparer must make additional inquiries if responses to probing questions do not appear to be correct, consistent and complete. The question you need to ask yourself when preparing your client's tax return is this, can you as a professional paid tax return preparer knowledgeable in tax law, conclude the information furnished to you by your client is correct, complete and consistent? If not, and you feel uncomfortable about your client's responses, you may want to let your client know that you cannot prepare their return until they are comfortable that they are indeed entitled to the credit. And I also have a feeling that some of you may be thinking about documentation and records and we will get into that. So that may be why some of you answered the question wrong, and we will be getting into that in a little bit in this webinar. Yes, I think you're right, Christine. All right, I'm going to give the mic right back to you. All right, thank you. So the next requirement is that worksheet requirement. To compute the credits, you need to complete the appropriate worksheets for each credit using either the worksheets found in the instructions for Form 1040 or your own worksheets that include the same information. You have these two options, but there are also worksheets included with most, if not all, professional tax preparation software that you can use. The worksheet requirement is a pretty simple one. The next requirement is for Form 8867, and it's important that you don't forget to complete Form 8867 that paid preparers due diligence checklist with each return that you prepare and submit with the credits and or that Head of Household filing status. If you're uncomfortable asking some of those probing questions, you may share with your client that you are required to complete the Form 8867 and use it as a guide during your conversation to ensure you're asking all the relevant questions. But this is important to keep in mind. Completing or using Form 8867 as a guide is not a substitute for performing all your required due diligence actions when determining your client's eligibility for the credits and or that Head of Household filing status. Also, if you prepare paper returns that include any of the credits and or that Head of Household filing status, ensure that completed Form 8867 is attached and submitted with the paper return. If your clients are mailing a paper return themselves, let them know how important it is to include the Form 8867. We're going to talk about that a little bit more soon as well. So let's go back to record retention. Of course, you must keep records. To comply with your record retention requirement, you need to keep either a paper or electronic copy of that Form 8867 that you submitted with your client's tax return. You also need to keep any applicable credit worksheets.

Keep any questions asked in your client's responses. Remember contemporaneously and keep any documents your client provided that you relied upon. Keep these records for three years from the latest date of the following that apply, the due date of the return, the date the return was efiled, the date you gave the return to your client for signature, and the date you gave the signing tax return preparer the part of the return that you were responsible for if you didn't sign the return. Now, Evette, guess what? It's time for our next polling question. Let's see how they do this time. Yes, yes, yes, yes. Okay, we've got this one. We've got the we were just warming up polling question number one was just a warm up. Okay, we're ready. We're ready, Christine. So the question is number two, which of the following is not a due diligence requirement that you as a paid preparer must always meet? Which of the following is not a due diligence because it is A, computing the credit; B, keeping records; C, completing and submitting the Form 8867; D, reviewing prior tax year returns or E, following the knowledge requirement? Okay, folks, we already know this. Christine just talked about several of these topics. Think about what she said. Think about what you already know. It's not a trick question.

Giving you just a few more seconds to review the question and make your selection. Which of the following is not a due diligence requirement that you as a paid preparer must always meet? Is it A, B, C, D, or E? Okay. Let's go ahead and stop the polling now and share the correct answer on the next slide. Okay folks, the correct response is, D, reviewing prior year tax returns is not a due diligence requirement. Let's see what percentage of you responded correctly. Okay.

Christine, we still have a we're better than we were the first time. So we're warming up.

We're at 77%, so we still want you to hey, it's good. We're good. We're good. You've got their attention. Can you just tell us just a little bit more about why the correct response is D? Sure.

Not a problem. So as I said before, the four requirements are the knowledge requirement, the record retention requirement, the worksheet requirements, and that Form 8867 requirement.

Reviewing prior year tax returns is not a requirement, but it may be a good idea with new clients or if the client is allowed by law to use their earned income from a prior year to figure the EITC or ACTC. So again, it's not a requirement, but it is a good idea. If you do review prior tax returns and rely on the information to meet one of the copies or one of the requirements, make sure you keep a copy. So hopefully that cleared it up for you all. Again, the four requirements are that knowledge requirement, which is really the most important one. The second most important one is record retention. The next one is worksheets, and the final one is Form 8867.

All right, so hopefully that clears that up. Now that we've talked about. I think that's a great explanation. Sounds good. Thank you. I love it. Let's go. All right, let's see. Then we will be on to the next poll question soon. So hopefully you know, we'll, like you said, getting better every time. We're warming up, Christine. We're warming up. We're warming up. Yes. So now that we've talked about your due diligence requirements as paid tax return preparers, let's move on to what happens if you are not applying due diligence and the IRS has contacted you regarding some possible due diligence issues. The IRS may send you a letter and the best action to take is not to ignore the letter, open it up and read it. It's important to know not all letters from the IRS propose penalties and request money. We also send out educational letters and we do send out educational letters to paid tax return preparers. Educational letters include a reminder of due diligence requirements. They also have additional information that can assist with how to meet your due diligence requirements and show you available resources such as the tax preparer toolkit on Now, if we send you an educational letter and there's still an indication that returns you are filing may have due diligence issues, we may follow up with additional letters, educational phone calls or visits, client audits, or a due diligence audit. So if you received one of our educational letters, what can you do to improve your due diligence? Well, good practice would be to review your office procedures on a regular basis to make sure all four due diligence requirements are truly being met. Review the tax requirements that apply to the credits to make sure the tax law has not changed. Take any additional steps to ensure your client's tax returns are accurate, like technology situations change and so does the tax law. Now let's look at a couple educational letters that we send out to paid tax return preparers. Letter 5364, which is titled Missing Forms 8867 is sent to paid preparers who do not submit the Form 8867, paid preparers due diligence checklist with paper returns. Now, as we said earlier, even if your client is adamant about mailing their own return, you need to ensure they include your completed Form 8867 when they mail that tax return. The IRS will send this letter when we observe multiple paper returns coming from the same preparer are missing the Form 8867. And this letter is a reminder and it's important to note. Please do if you do get this letter, do not send us any missing Form 8867 as we do not have any way to associate the form with your client's original tax return once it's been filed. And as you may notice, this letter has a QR code that direct preparers to the tax preparer toolkit on EITC Central for more resources and information. Now, before I go onto the next letter, I want to address what happens when a Form 8867 is not received with an electronically filed return. The IRS will send you as the preparer an electronic alert if you e-filed a return missing Form 8867. However, this will not affect the acceptance or processing of your client's tax return. So you may get a 5364 in the future. Again, if we notice multiple electronic returns filed from the same preparer are not including that 8867. So we have one more letter to talk about and that is an educational letter 4858. Letter 4858 which is titled, you may not have met your due diligence requirements is an educational letter sent during filing season when it appears paid tax preparers may not be meeting their due diligence requirements when filing their client's current year tax return. So be on the lookout, because once those 2023 returns start coming in at the end of the month, we will be starting to send out that letter 4858. Our letter reminds the preparers of their due diligence requirements and that they may not have met those requirements through the returns they just recently filed. Like the other letter, the letter 4858 includes the QR code to direct tax preparers to that wonderful tax preparer toolkit on EITC Central for additional resources. Now I'm going to go on to another contact method and that is phone calls. All of us have heard telephone scams where fraudsters are calling taxpayers claiming there's outstanding taxes due and demanding payment.

Therefore it's easy to understand there could be some confusion about when a phone call from the IRS is legitimate and we do make phone calls to tax preparers who have received one of our letters and continue to file returns that appear to have errors claiming the credits or the head of household filing status. We've actually just started that in the last couple weeks. So we are making calls as we speak. Our calls are educational, but they also deliver a compliance message.

And we're calling to help you avoid errors in preparing your client's returns as well as to avoid potential due diligence penalties which can quickly add up as we saw in the earlier slides.

And keep in mind we will not and do not ask for any personal information about your clients. When we make the calls, we attempt several times with your available contact numbers. If the call is successful during the call, the IRS employee may mention the last time we tried to contact you and that this is a follow-up call. In order to avoid unauthorized disclosure, they will ask you to confirm your identity, business address and/or your PTIN that preparers tax identification number. The IRS employee will not provide specific information about your client nor ask you to disclose any client information. The IRS employee will explains that the return submitted to the IRS are being monitored and reviewed. They will also review additional due diligence requirements and discuss possible consequences for not meeting them and offer resources on due diligence, educational products and training. Really a really nice call and we have really, really nice people doing it. So we've got one more educational treatment and I'm going to go over that now. You may get letter 6223, which is a knock and talk visit introduction. And the purpose of a knock and talk visit is educational and allows for an IRS employee to discuss current due diligence laws, address potential due diligence errors, because they'll be going over some of the returns actually that you've provided and they'll be going over them in your office and share how preparers and comply with due diligence requirements in the future. Knock and talk visits are generally made by an IRS revenue agent and may also include a special agent from our criminal investigation division. Now let's discuss the process for a correspondence due diligence examination. The letter 6222 notifies the preparer that they've been selected for a correspondence due diligence examination as part of our paid preparer due diligence program. The letter includes a request for the preparers to call the IRS examiner to set up an appointment.

Also includes obviously a telephone number and a limited period time period to make the call. The letter will also include Form 4564. Is that information and document request specifying what documents are needed to verify that a preparer is in fact following due diligence requirements.

Now suppose the preparer ignores the letter and does not bother to call that examiner. Well do you think the IRS is going to forget about the prepare? Probably not. If we do not hear from the preparer to schedule the appointment, we are going to try and call them several times. We don't get a response. Penalties may be proposed under Section 6695(g). Remember folks that can be up to $2,400 for return. A lot of money. Keep in mind if you are selected for a due diligence examination and you decide you want representation and always complete Form 2848 power of attorney and declaration of representative and mail or fax to the IRS by the time of the appointment. So let's see what happens next in this correspondence due diligence audit. During the examination the examiner will review the documents that the preparer sends in for the requested clients, and generally it's going to be a minimum of 25 client returns and the associated files. The examiner will also interview the preparers and in this case it would be over the phone and they'll ask general questions such as length of time in the tax business and experience. Give a check sheet intake form that you use. Do you ask additional questions or just the questions on the check sheet intake form? Have you taken any due diligence training? What about other preparers that you employ? Do you train them? Do you review their work? Do you use IRS worksheets or do you have your own? When the examination is completed, the examiner will conduct a closing conference in which penalties may be proposed or there'll be a determination that the preparer was in compliance with the due diligence requirements per Section 6695(g). Now there's a little more that I want to share about the examination and that would be about the closing conference. If the examiner determines the preparer did not meet their due diligence requirements, the examiner will provide an examination report along with letter 1125 transmittal of preparer penalty report with the proposed penalties. We've been saying there are four different tax benefits subject to due diligence and that penalty is $600 for each failure up to a total of $2,400 per tax return. If the preparer agrees to the penalties, they would sign the Form 5816, which is report of tax return preparer penalty case and pay the whole amount or make a partial payment and request the IRS to send a bill for the rest. The preparer can also request an installment agreement. Now the preparer does not agree with the proposed penalties. They will have appeal rights. That letter 1125 advises preparers they have 30 days to file an appeal, which will be forwarded to the IRS Independent Office of Appeals. And the letter outlines what should be included in the written appeal request. If the preparer does not respond or contact the IRS within that 30-day period, the case will be closed and the proposed penalties will be assessed.

Now there's other treatments that can occur as well. For example, there may be cases where an injunction can be ordered. The Justice Department's Tax Division and the IRS under the Civil Injunction Program may seek a court order called an injunction and that will bar a person or business from engaging in specified misconduct or from preparing tax returns for others. There may also be instances where IRS refers preparers that willfully file fraudulent returns, criminal investigation, or to the office of professional responsibility. All right, let's apply what we just went over. Evette, it's time for another polling question. It is Christine, and I'm excited. You just gave us a lot of great information. All right, folks, here we go with Polling Question #3, A paid preparer who fails to meet the due diligence requirements, IRC section 6695(g), may incur which of the following consequences? A, due diligence penalties; B, E-file sanctions; C, an injunction barring the paid preparer from tax return preparation for others; or is it D, all the above. All right, folks, this is our time to shine. We've come here together to learn a lot of information. Christine is giving us some great stuff. Look at the question, look at the possible responses and click the radio button that best answers the question. I think there's just as fun Evette. I feel it too, Christine. I'm feeling really confident right now. All right folks Well keep going up. We do. We we're going up. We're going up. We're here to learn.

So we're going up. All right folks, take a moment. Let's see, is your answer A, B, C, or D. All right, let's go ahead and close the polling now. Let's stop it now and share the correct response on the next slide. And the correct response is D, all of the above. Drum roll. Woo, Christine, we've got 90%. Yes, 90% of you responded correctly. They know this one. I told you we were warming up. All right, so it is. Back to you, Christine. All right. Thank you. Great job everyone.

All right, this is going to be a good one for you all. And here's a question. What documents did you paid tax preparers ask for when interviewing a client claiming certain credits and/or that Head of Household filing status? I'm going to give you a few seconds to think about this. And I think this question may be why some of the ones were flummoxed on an earlier poll question. I'm going to give you a couple minutes to or a couple seconds to think about it. And here's the answer. You do not have to request any documents. However, you must make reasonable inquiries if the client gives you information that appears to be incorrect, incomplete, or inconsistent. In some, if not most cases, though, it may be a best practice for you to ask for certain documents, but you do not have to per the treasury regulations. And don't forget, as I mentioned earlier, if your client did bring in documents to support their eligibility to claim the credit or that Head of Household filing status and you relied on that information, then you must keep a copy to comply with your record retention requirement. And some examples of that supporting documentation may include school records. W-2s, we all know they bring them into you. 1099s, they're self-employed. They'll bring those in. And for that American Opportunity Tax Credit, they're almost always going to bring in those 1098-Ts. So again, if they bring in any of those documents and more and you relied on them, you must keep a copy to comply with your record retention requirement. Now, let's look at another Frequently Asked Question. And I think I saw this question in the Q&A. Several people were asking this earlier and this question obviously is common. I've known my client for years, so do I still need to perform due diligence? Again, think about that for a moment or two, give you the answer. And the answer of course is yes. You must make reasonable inquiries to determine your client's eligibility for the credits and or Head of Household filing status and document your client's responses. Even if you believe you already know the answers and you've known that client for years, you still need to follow your due diligence procedures. Your client may have experienced a life event that changed the types of credits they're eligible for, but you would not know unless you asked your client the right questions. And this is especially true when it comes to qualifying children for the credit, relationship does not change, but residency might. You do not live with your clients, so you still need to perform your due diligence. Hopefully that clears it up. And Evette, let's move on to our final polling question. Yes, yes, yes, yes. Okay, Christine, here we go. All right, audience, here's our fourth and final polling question. When would you file Form 8867, the paid preparers due diligence checklist? Is it A, for a return claiming EITC, CTC, ODC, AOTC, or HOH filing status; B, when completing an electronic return, per IRC Code 7896; C, for a return that claims the Child and Dependent Care Expense or D, for any return you sign as a paid preparer.

Take few moments folks. Look at this question and click the button to show the best answer that you believe is correct. Look at the question. Which would you file Form 8867, the paid preparers due diligence checklist. When would you file, when would you file it A, B, C, or D? Giving you another moment to respond to the question. Okay, time flies when you're having fun. We're almost out of time, Christine, so we got to move it along. Let's go ahead and close the polling now and share the correct answer on the next slide. We've got some great questions here. Okay, folks, and the correct response is A, for a return claiming EITC, CTC, ODC, AOTC, and HOH filing status and folks, I'll take this, 80% of you responded correctly. Great job, everyone. All right, Christine, we've got a short time to get wherever we're going. I'm going to turn it back over to you while we get to the questions. All right, I'll drive that car to the end. Keep in mind though, remember the software you use to complete your tax returns, those intake sheets as well and Form 8867 are not substitutes for knowledge of the tax law. You may need to ask additional questions and document them if needed. So in closing, we do have several online resources designed for you members of the tax return preparer community in mind. And I just mentioned Publication 4687, which is paid preparers due diligence checklist or paid preparer due diligence, and the tax preparer toolkits. They're helpful tools you can use to meet your due diligence responsibilities. And there should be a link on the slide to the tax preparer toolkit. So what does the online site offer you? Well, it provides information on due diligence requirements.

There's articles, publications, examples of the various letters we sent and up to the minute compliance messaging and we call those hot topics. In addition, the IRS offers free online compliance education and due diligence training via the IRS Tax Preparer toolkit and check out the Tax Professional Awareness Week webpage. This site has tools and information to help prepare accurate returns on behalf of clients, and it's designed to empower tax professionals with updated knowledge and skills in the evolving field of taxation. Our goal is to help you get it right and avoid any educational or compliance letters or calls or audits from the IRS. Now, I'll pass it to Evette to start our Q&A session. Thank you, Christine. Thank you. All right folks.

Hello, it's me again, Evette Davis and I will be moderating the Q&A session. Before we get started with the Q&A session, I do want to thank everyone for attending today's presentation on Answering Your Frequently Asked Questions about Due Diligence. Earlier I mentioned we want to know what questions you have for our presenter, and here is your opportunity. If you haven't input your questions, go ahead and do that right now. Click on the dropdown arrow next to ask questions, type in your question and remember to hit send. Christine, wonderful. Christine is staying on with us to answer those questions. One thing before we get started, folks, unfortunately we may not have time to answer. I know we won't have time to answer all of your wonderful questions submitted, but we'll answer as many as we possibly can. So let's go ahead and get started so we can get to as many as possible. Christine, I hope you've had a chance to take a sip of water because we're going to go through this like a lightning round so we can get so as many questions as possible. All right, are you ready? First question is, why does my tax software insist due diligence completion for the same client each year? Is there any way to avoid it? That is the question. Well, that's a great question and I think that was done, like, I think we answered that like two slides ago where we said that you must do due diligence every year.

Just because it's a returning client doesn't mean that you don't have to do your due diligence.

Again, relationship wise, a son is a son is a son and will always be the son or daughter or daughter or daughter. But then when we get into other relationships, you know nieces, nephews, all that, maybe they lived with that client for the year before because their parents were somewhere else, but now their parents are back. So you can't just automatically assume that that qualifying child is going to be a qualifying child for the next tax year. Again, relationships don't change, but residency might. So that's why. All right. Sounds good to me. That makes sense.

All right, good. Let's keep it moving with this part. Let's see. Does due diligence require training every year? Does it no, it doesn't require training every year. Again, if you've got specific procedures in place in your office to review returns, say you're the owner of the business and you return, you review what your employees are doing and that seems good and they're asking questions and contemporaneously documenting the questions and answers of the clients. They're also retaining the records that the clients may bring in to, and that they're relying on to prepare that return. If they seem to be doing everything right and you're not getting any letters from us that you're may doing something wrong, you wouldn't need to have due diligence training every year unless something changes in the law. And it's been, I want to say about six years since they added new credits and that Head of Household filing status to due diligence requirements because in long time ago, it used to be for earned income credit only, unless there's changes in the law, it's not and you see that your employees or you know that you're doing the right thing, then you really don't need to have due diligence training every year. Awesome. All right, Christine, I'm going to give you one more question. This one, this question. If they show us the documents, do we have to keep a copy of the documents or can we just notate what was in the documents? You must keep a copy of the document. Remember, one of the requirements, one of the four requirements was record retention. If it's something that they brought in and you relied upon that to prepare the return and claim a credit or that Head of Household filing status, you must keep a copy for three years of when the return was filed. Now, that copy can be kept as a, make a copy on your copy machine if we have that, or it can be kept electronically what your client files if everything else is kept electronically for your client files. But that you must keep a copy if they brought it in. You cannot just notate that and say you saw it. Because if you saw it, you got to keep it. Got it. Thank you so much, Christine. I know that was like a lightning round and I'm glad this is a Q&A session for the whole 60 minutes. But audience, that's all the time we have for questions and I do want to say thank you to Christine for sharing her knowledge and expertise and for answering your questions. But before we close this session, Christine, can you share just quickly a few key points that you want the attendees to remember from today's webinar? Sure. And most important Due Diligence is more than going over a checklist. The information provided by your client does not seem to be correct, consistent, and complete. Ask more questions to clarify and contemporaneously record the answers to those questions. Although not required, documentation can be requested and you should keep a copy of that documentation that you used if it was provided. Again, although not required, which is very important, the IRS can reach out to tax professionals in a variety of ways. Don't ignore these contacts. Take action. These interactions can be educational, so take advantage of this opportunity, and audience, that's my time for today and I thank you for your participation in your great questions. And Evette, I'll send it back to you to close. Awesome, thanks again, Christine. Okay, audience, we are planning additional webinars throughout the year. To register for upcoming webinars, please visit, keyword search webinars, and select webinars for tax practitioners or webinars for small businesses. And when appropriate, we will be offering certificates and CE credit for upcoming webinars. We invite you to visit our video portal at where you can see archived versions of our webinars. Remember folks, Continuing Education Credits or certificates of completion are not available, are not offered if you view an archived version of our webinars on the IRS video portal. Another big thank you to Christine for a great webinar and thank you for attending and for attending today's webinar, Answering Your Frequently Asked Questions about Due Diligence. If you attended today's webinar for at least 50 minutes after the official start time, you're going to get a certificate of completion that you can use with your credentialing organization for one possible CE. Remember, that does not include the time we spent chatting before the top of the hour. If you're eligible for the continuing education from IRS and registered with your PTIN and it was a valid PTIN, your credit will be posted to your PTIN account. If you are eligible for continuing education from the California Tax Education Council, your credit will be posted to your CTEC account as well. If you qualify and you have not received your certificate or credit by December by, what is this, January, February, within the next couple of weeks, please email us at We would appreciate it if you take just a few minutes to complete a short evaluation before you exit. If you'd like to have more sessions like this one, let us know. Give us your thoughts on how we can make them better. Please let us know that any questions or any suggestions you have as well. If you have requests for pertinent information on different topics, if you want information on, I don't know additional IRS fact sheets, tax tips, or FAQs, then please include that in your suggestions in the comments section. Click the survey on the right side of your screen to begin. If it doesn't show up, make sure you disable that popup blocker. Folks it has been a pleasure to be here with you today. And on behalf of the Internal Revenue Service and our speakers, we would like to thank you for attending today's webinar. It's so important for the IRS to stay connected with tax professionals like you, individual taxpayers, industry associations, along with federal, state, and local government organizations. You all make our job so much easier by sharing the information that allows for proper tax reporting. Thanks once again for your time and attendance and we wish you much success in your business or practice. You may exit the webinar at this time.