Draft of Form for Expanded Preparer Due Diligence Released by IRS

The IRS has released a draft copy of the 2016 Form 8867, Preparer’s Due Diligence Checklist, for use the preparing 2016 returns.  One key difference is that the form now applies not only when a preparer is preparing a return claiming the Earned Income Tax Credit, but will also apply in 2016 to any returns claiming the Child Tax Credit or the American Opportunity Tax Credit, expanded coverage mandated by the Protecting Americans from Tax Hikes Act of 2015.

The form consists of a checklist of due diligence steps required to be undertaken by a preparer when preparing a return where the taxpayer claims eligibility for one of these credits.  A preparer who fails to comply with these requirements risks a $510 penalty for each failure. [IRC §6695]

The draft form is reproduced below.