Course Information

Course No:  9512022

Course Name:  EITC Due Diligence

Field of Study:    Tax Law Topic

Course Description:  

The Earned Income Tax Credit (EITC) is a refundable tax credit that has a significant impact on United States revenue. It is also the source of a disproportionately large number of errors in tax returns in which a claim for it is made. In a recent year, 150.3 million individual federal tax returns were filed, and more than 27.4 million—18.2% claimed the Earned Income Credit1. Based on that percentage, it would not be unexpected that, in the years ahead, approximately one taxpayer in every five will claim the EITC. Approximately 70% of federal income returns claiming the earned income credit are prepared by professional tax return preparers.

This course briefly summarizes the earned income credit rules, examines the common errors committed when claiming the credit, discusses the EITC due diligence requirements imposed on professional tax return preparers, and identifies the sanctions to which preparers and their employers may be subject for a failure to meet expected due diligence requirements.

Learning objectives: After completing this section, you should be able to:

  • Recognize the earned income credit eligibility rules;
  • List the common errors committed in connection with claiming the earned income credit;
  • Describe the consequences for the taxpayer of the IRS’ disallowance of the earned income credit;
  • Identify the tax return preparer’s earned income credit due diligence requirements; and
  • List the sanctions that may be applied on a tax return preparer and his or her employer for a failure to meet due diligence requirements.
  • List the due diligence requirements a tax return preparer must meet when preparing a tax return claiming the earned income credit;
  • Recognize the records a tax return preparer is required to keep to support a client’s claim for the earned income credit;
  • Identify the penalties that may be imposed on a tax return preparer for failing to comply with due diligence requirements when preparing a client’s tax return claiming the earned income credit;
  • Recognize the sanctions that may be imposed on an employer whose employee fails to comply with EIC due diligence requirements; and
  • Identify the additional requirements imposed on taxpayers claiming the EIC following disallowance and the exceptions to those requirements.

Course Material: Online Material

Program level: Overview

Prerequisites: None

Advance preparation: None

Type of delivery method: QAS Self-study

Recommended CPE credits:   2.0

Final examination expiration date:   The program participant will have one year from the date of purchase to complete the course and final examination.