Skip to Content

November 24, 2020


Tax preparer mistake involving EITC could lead to audit

Being a tax preparer in Texas and across the country is a complex occupation. The tax laws at the federal and state level are constantly changing, and each year preparers have new information to learn. As a result, even professionals could make mistakes. However, if a tax preparer mistake involving the earned income tax credit occurs, the IRS may conduct an audit to determine whether the preparer purposefully acted in a fraudulent manner.

The earned income tax credit can help by reducing the amount of taxable income that low-income individuals or households have. However, the eligibility for this credit and the exact amount credited depends on multiple factors, including whether taxpayers are filing individually or jointly with a spouse, how many dependents they have, their income level, and more. While tax preparers rely on the information provided by the taxpayer to determine whether this credit applies, it is necessary for the preparer to determine that the information is accurate.

Because the credit applies on a case-by-case basis and even differs between qualifying individuals, tax preparers must be vigilant in their efforts in determining whether a person qualifies. Even if a person qualified for the credit in previous years, it is possible to lose eligibility for numerous reasons. If the IRS suspects that a preparer ignored the rules or used fraudulent information to help someone get the credit, the preparer could face serious consequences.

In the event that a tax preparer’s mistake leads to an IRS audit over the earned income tax credit, it is important that the preparer has the right help. Tax preparers in Texas may want to consider obtaining legal help from tax law professionals who could assess the situation and determine the best way forward. Tax preparers and taxpayers alike can have a difficult time with the IRS, and having help could make all the difference for a favorable outcome.

Taxpreparer Investigations