We are former IRS agents and managers who know the system and secrets behind tax audits. Since 1982, A plus Rated.

We have over 200 years of professional tax experience and over 100 years of working directly for the Internal Revenue Service and the local, district, and regional tax offices of the Internal Revenue Service.

What has happened

Over the last couple of years the Internal Revenue Service estimated that they have paid over $20 billion in frivolous tax credit claims and they plan to close the loophole used by certain practitioners in the area of abuse. special teams have been formed to audit tax preparers that they have flagged or have the potential for abuse.

If you have received a letter or IRS has knocked on your door, you may want to give us a call. Would not be in your best interest speak to IRS unrepresented unless your absolutely squeaky clean.

IRS is Auditing for Due Diligence Compliance (no more free money on tax credits)

Audits for compliance with refundable credit and head of household (HOH) filing status due diligence requirements are another tier of our Preparer Compliance Program.

We look at returns with a high chance of errors completed by the same preparer and use that information to select preparers for audits. We may have contacted the preparer using one of the other tiers of our Preparer Compliance Program but we don’t use all of them for every preparer.

Audit Visits

Before the filing season begins, IRS employees conduct due diligence audits based on the prior year returns. We schedule an appointment in advance for these pre-filing season audits and we expect preparers to schedule the audit within 15 days.

During the filing season, we conduct due diligence audits without advance notice. We previously sent the preparers a letter informing them of a potential audit. We may also audit the preparer’s client returns.

What Happens During the Audit?

During these audits, the IRS employee provides official IRS identification. The examiner interviews you about your business practices. If you are an employee of a tax preparation firm, the examiner also contacts your employer for an interview.

The examiner is looking for compliance with all four due diligence requirements.

The tax examiner reviews at least 25 returns reviewing the following documents:

• The preparer’s due diligence records,
• The probing questions the preparer asked the client, and the client’s responses,
• All questionnaires, checklists, worksheets and
• Copies of any client provided documents relied on to determine eligibility for head of household (HOH) filing status, or to determine eligibility for, or compute the amount of , the earned income tax credit (EITC), child tax credit (CTC), including additional child tax credit (ACTC) and credit for other dependents (ODC), and American opportunity tax credit (AOTC).

If the examiner identifies failures to meet due diligence on any of the returns, they may expand the audit to more returns.

During the audit, the examiner looks for evidence showing the preparer met the knowledge standard.

To meet the knowledge standard, a preparer must:

• Know the law
• Ask the right questions, especially when the client gives information that appears incorrect, inconsistent or incomplete
• Document the questions asked and the responses given by your client
• Get all the facts to make sure your client truly qualifies for EITC, CTC/ACTC/ODC, AOTC or HOH filing status

While auditing for due diligence, we also ensure that the preparer is in compliance with the PTIN, Preparer Tax Identification Number requirements and his or her personal tax return filing requirements.

What Happens if My Records Don’t Show I Met Due Diligence Requirements?

We assess penalties when we find a preparer did not comply with due diligence requirements.

We continuously improve our audit selection process to find those preparers with a high likelihood of filing returns with errors. Using this process, we penalized over ninety percent of the preparers we selected for audit.

We assess most penalties against preparers who did not meet the knowledge standard.

The penalty for not meeting due diligence requirements is $520* for each credit (EITC, CTC/ACTC/ODC and AOTC), or HOH filing status claimed on a return filed in 2019.

Other return-related preparer penalties can be as much as $5,000.
* The penalty amount is adjusted for cost of living under IRC Section 6695(h).

What if I Don’t Agree with the Penalties?

The first thing you do if you are unrepresented is to call former IRS agents and managers who can help you with this fight.

Also available:

See Appeal of Due Diligence Penalties
Are You a Certified Acceptance Agent?
To reduce the burden on preparers, IRS combines the due diligence audits with certified acceptance agent visits as needed.

Expert Help, IRS Auditing Tax Preparers + EITC TAX AUDIT * former irs agents help + Los Angeles, San Diego, San Jose, San Fransisco, Fresno, Sacramento