Due Diligence Requirements

The information on this page explains the tax law by describing the due diligence requirements that assist you in determining whether or not a client is eligible for the EITC.

The Taxpayer Relief Act of 1997 added code section 6695(g), which requires preparers of Federal income tax returns or claims for refund involving the earned income tax credit to meet the due diligence requirements. Failure to do so could result in a $100 penalty for each failure. The rules for 1999 returns are:

1. You must complete Form 8867 (Rev. December 1999), Paid Preparer's Earned Income Credit Checklist (or your own form as long as it provides the same information).
2. You must complete the EIC Worksheet in the Form 1040, 1040A, or 1040EZ Instructions (or your own worksheet as long as it provides the same information as the 1040, 1040A, or 1040EZ worksheet(s).
3. You must have no knowledge that any of the information used to determine your client's eligibility for, and the amount of, the EIC is incorrect and you must ask the client if the information appears correct.
4. You must keep the following information for 3 years:
   • The completed Form 8867 (or your own form), and;
   • The EIC worksheet (or your own worksheet), and;
   • A record of how and when the information used to determine eligibility for and the amount of, the EIC was obtained by the preparer.

Promotional/Informational Materials

The following EITC promotional/informational items are available for your business needs. These products are too large for download. Paper copies are available by calling 1-800-829-3676.

Earned Income Tax Credit

Publication 1622  EITC brochure
Publication 3211  EITC Q's & A's Brochure
Notice 962        EITC Stuffer
Publication 1495  EITC Poster (8½" x 11")
Publication 3523  EITC in a Nutshell Poster (8½" x 11")
Publication 3524  EITC Eligibility Checklist Poster (11" x 17")
Publication 3170  Drop-in Ad Package for Various Tax Credits
Publication 3107  2000 EITC Tax Professional Kit
Publication 3522  2000 EITC Tax Professional CD-ROM
Publication 1830  2000 EITC Sell-in Sheet

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