TCJA Expands Preparer Due Diligence Requirements

The IRS has issued final regulations expanding paid preparer due diligence requirements to head of household filers. The additional requirement will apply starting with 2018 returns prepared on or after November 7, 2018.
Legislation in 2015 expanded the due diligence requirements to include the Child Tax Credit, Additional Child Tax Credit, and American Opportunity Tax Credit. Under the TCJA, the due diligence requirement now also applies to individual income tax returns claiming the head of household filing status.
Paid preparers must submit Form 8867, Paid Preparer’s Earned Income Credit Checklist with every tax return claiming any of the covered tax benefits. The form will be revised later this year to reflect the addition of the head of household filing status. Preparers are required to keep copies of the form or comparable documentation for their records.
Preparers are subject to a penalty for each failure to comply with the requirement. For tax year 2018, the penalty will be $520. Click here for details.