Completion and Submission of Form 8867

Form 8867 is to ensure that the tax preparer has considered all applicable EIC eligibility requirements for each prepared tax return. You should ask questions applicable to each client and be able to explain the meaning and reasoning behind each question. Form 8867 should be completed based on information provided by the taxpayer to the tax return preparer.

• Complete Form 8867, Paid Preparer's Earned Income Credit Checklist, to make sure you consider all EIC eligibility criteria for each return prepared.
• Complete the checklist based on information provided by your client(s).
• For returns or claims for refund filed electronically, Form 8867 will be submitted with the return.
• For returns or claims for refund not filed electronically, attach the completed form to any paper return you prepare and file.
• For returns or claims for refund, you prepare but do not submit directly to the IRS, provide completed Form 8867 to the taxpayer to send with the filed tax return or claim for refund.
  

The knowledge requirement states you must not know, or have reason to know, that any information used in determining your client’s eligibility for, or the amount of, EIC is incorrect. How to comply with the knowledge requirement:

• Know the law and use your knowledge of the law to ensure you are asking your client the right questions to get all relevant facts.
• Take into account what your client says and what you know about your client.
• Make additional inquiries if the information is incomplete, inconsistent, or incorrect, as a reasonable and well-informed preparer would determine.
• Document at the time of the interview any additional questions you ask and your client's answer.

The Treasury Regulations give examples of the application of the knowledge requirement. Find current regulations for tax return preparer due diligence requirements here and proposed regulations here.

The IRS requirement for keeping records may be more extensive than you realize. Use the following list as a guideline to ensure you are retaining copies of all IRS required documentation.

• Keep a copy of the Form 8867 and EIC worksheet, and a record of any additional questions you asked your client to comply with your due diligence requirements, along with your client's answers to those questions.
• Keep copies of any documents your client gives you that you use to determine eligibility for, or the amount of, the EIC.
• Verify the identity of the person giving you the return information and keep a record of who provided the information and when you got it.
• Keep your records in either paper or electronic format, but make sure you can produce them if the IRS asks for them.
• Keep these records for 3 years from the latest date of the following that apply:
• The original due date of the tax return (not including any extension of time for filing), or
• If you electronically file the return or claim for refund and sign it as the return preparer, the date the tax return or claim for refund is filed, or
• If the return or claim for refund is not filed electronically and you sign it as the return preparer, the date you present the tax return or claim for refund to your client for signature; or
• If you prepare part of the return or claim for refund and another preparer completes and signs the return or claim for refund, you must keep the part of the return you were responsible to complete for 3 years from the date you submit it to the signing tax return preparer.