Has anyone gone thru the Due Diligence Audit from the IRS yet and if so what can be expected with the exam and how much help does H&R Block provide the tax prepayer for this. Any information would be great. Thank you
"If you notice, the original thread was on the subject of EITC. Apparently you are one of those people who have to criticize high earners at every chance."
You missed the point the point that the IRS is targeting various income groups for audits, including some of the weathier clients as well as EITC clients. Sorry, but I just didn't read any envy in that post.
If you notice, the original thread was on the subject of EITC. Apparently you are one of those people who have to criticize high earners at every chance. Get an education, make good financial decisions, work hard and you won't have to worry about high earners do and just maybe you can be one of them.
EIC seems to have the same temptation as a key left in the ignition of a parked car, in a poor neighborhood. IRS is so well aware of this, they keep tightening up the rules trying to “hide the keys”, but never quite get them out of sight.
I took IRS’s EIC course as everyone in my office did. We printed up the nice certificates for passing their test, and hung it on the wall of our stations. We have the rules down pat. We ask all the questions, there is nothing we can do when a client says it’s his niece that lives with him, but ask “where’s the parent?” “Where’s the other parent?” “Is your address the one used on the child’s school and doctor’s records?” “Who else lives in your household?” “Who’s watching the kid while you work?”
These folks come fully rehearsed.
If I turn a client away telling them they don’t’ qualify for EIC, I explain why, and the only thing I’ve done is tell them how to answer the questions when they meet their next preparer.
Congress created this mess trying to help the poor, and the poor are trying to help themselves to money they don’t qualify for.
Just as Form 5405 created a 2 year old first time home buyer, any massive “give-a-way” program is bound to see fraud. It was easy pickings, as all those prisoners in jail found out.
IRS can fairly easily pinpoint fraud on Sch C (percent of profit alerts them), and they’re now tightening up on Sch D for 2011. I’ve talked to many IRS auditors that are getting wiser & more alert.
He/She that qualify for EIC, God bless them. Putting the pressure on preparers demanding we interrogate clients to avoid a fine is ridiculous. Take the keys out of the car and park it in a better neighborhood. EIC hand outs belong with social workers, who have full access to data that shows where the kid lives, and who the child belongs to.
No more estranged parents getting the money, leaving the custodial parent with a rejected return as kids have already been claimed. No more “Uncles” who don’t know the kid’s birth date or middle name.
louisville, I didn't find your original post to be mean-spirited or against the poor in anyway. In fact, it got me thinking about the preparers who try to help them. You are right. When I was at Block there were certain tax pros who used liberal interpretations of the Code to qualify clients for HOH and EITC. After reading your post I realized that all of them were in the same position as their clients and were just trying to help a comrade. For example, one always claimed her brother, who didn't live with her, because her parents (with whom he lived) didn't file a return. Her clients got to claim all sorts of dependents that I likely would have refused to put on the return.
Thanks for that observation. It wasn't classist but a realistic slant on human nature.
I am going to assume and I may be wrong that you are in the tax industry just looking at your name. There are certain types of returns EITC, Schedule C, Small Business in general which encompasses a wide group depending on the definition, Employee business expense, certain returns with complicated investments, real estate investors, and the list goes on that fudging and reporting incorrect data has become more and more a issue over the past 15 or so years.
The IRS in the 90s became the friendly and customer service minded IRS and sit down audits became a thing of the past. The only audits that were really being done was letters correcting bad calculations or letters correcting income items that were never included on the return but were reported to the IRS. Because of this business got more and more comfortable not take the precautions and not following accepted business practices of record keeping. Everyone got comfortable with doing a little more every year until now and the country is in a financial crisis and the IRS has decided to change and go back to the "Old IRS" and aggressively search for fraud and returns not containing information backed up with records.
So no I am not anti EITC at all. EITC fraud is a issue and the IRS has decided to go after preparers making them responsible for what they put on the return. EITC fraud is not only a problem with taxpayers but with firms who have over the past 10 years especially used it to promote fraud and line their pockets with fees. There are preparers who have encouraged and intentionally gave bad info to eitc clients to not just get their business but to pad the fees by doing multiple returns on married couples when 1 return was the correct way to file.
Because the IRS has decided to aggressively go after preparers, anyone owning a tax preparation office needs to be very careful and protect themselves, ensuring they hire preparers who will follow strict guidelines when doing all returns and not fall into "helping the customer" by fudging information.
Not only are EITC clients being targeted by the IRS the super rich "employees" who use complicated trusts and tools are also being targeted. There are plenty of articles regarding the new division of the IRS tasked with auditing this group. This is not about class warfare, its about how to survive and do whats best for our clients.
Thank you and on the other hand the IRS has a new division going after the rich that the previous poster thought I was all for. They are aggressively auditing them and demanding they produce documents very quickly and holding them to the highest of standards.
The IRS is going after all and everyone needs to understand and see what this means for them so they can make the necessary change if needed.
"In no way am I down on low income or EITC clients. My comment was being very honest and anyone knowing and understanding this industry will tell you that EITC Fraud is a huge issue."
Nice, objective response. EITC fraud is a huge problem or the IRS wouldn't be sending agents out like they have been the past couple of years.
In no way am I down on low income or EITC clients. My comment was being very honest and anyone knowing and understanding this industry will tell you that EITC Fraud is a huge issue. Those are just facts that the industry is facing today. Now I am not saying that all EITC is fraud. There are some very good clients that would never think about claiming a credit that is not deserved but there is a large percentage that see tax time as a way for them to get money and they will do what they have to do get it.
Let me clarify on hiring. If a firm hires someone who has been brought up thinking that getting eitc at all cost including cheating then more than likely there will be issues and the chance of preparers helping in the false claiming of eic goes way up.
We as a country have gotten used to a nice freindly IRS for the last 15 years. Tons of small business have gotten used to the "inflate expense" and "deflate income" way of doing business. The IRS is no longer freindly and with the dramtic increase in sit down audits targeting business, is going to show business they have to go back and change their ways or risk the IRS possibly ruining them.
I do not have a negative image or opinion of anyone. It is not my job to judge anyone but to treat all my clients professionaly and do the best possible job I can for them. Neither myself or my staff are the IRS Police and all we can do is follow and use the tools given to avoid fraud. You are taking me being honest and truthfull as me insulting people and its just not true. Of course cheating goes on in all classes when speaking of taxes. We have to be able to have honest conversations in this country without people taking so much offense when the truth is told.