The Internal Revenue Service is sending a reminder to some tax preparers, reminding them that the Earned Income Tax Credit claimed in one of their returns was missing needed due diligence.
The letter from the IRS - Letter 5025-H – is being sent to tax pros who completed returns claiming EITC for taxpayers reporting income as household employees but without a Form W-2 to substantiate the income. These preparers may not have met their EITC due diligence requirements.
The EITC Central page on the IRS web site explains that tax preparers should not simply ignore the IRS letter. Review office procedures to make sure you meet all four due diligence requirements.
If you receive this letter, the IRS will continue to monitor the EITC returns you prepare. If the quality of the returns you prepare doesn’t improve, you may be subject to special follow-up. This includes phone calls, additional letters, educational visits, the possibility of an on-site audit or a Due Diligence Compliance Audit.
Learn more about this letter and other due diligence information by visiting the EITC Central page on IRS.gov.