Tax preparer due diligence rules are finalized
The IRS on Tuesday finalized proposed regulations under Sec. 6695(g) imposing a penalty on tax return preparers who do not follow certain due-diligence requirements when preparing to file returns for taxpayers who are claiming head-of-household filing status, the earned income tax credit (EITC), the child tax credit, the additional child tax credit (ACTC), or the American opportunity tax credit (T.D. 9842). The IRS said it was adopting the existing proposed regulations without substantive change, other than adding some examples. It also removed the temporary regulations that were issued with the proposed regulations in 2016.
The penalty, which is adjusted for inflation, is currently $520 for each failure to comply, potentially resulting in multiple penalties arising from a single return.