Following links can be interesting.
This morning I received an IRS Quick Alert about the Earned Income Tax Credit (EITC) compliance actions the IRS is starting. Following a link for more info on the program, I found another link to an article about a lady who prepared over 1100 returns in 2009 and 99% of them resulted in refunds. Only 11 returns of 1100 owed money. No wonder she was caught. Please it you're going to cheat, cheat smart. But better yet, don't cheat, especially with Earned Income Credit because the IRS is working hard to catch and stop you.
Seriously, EITC is a good program and can help a lot of good working people but it is also the most abused IRS program (although the 1st Time Home Buyer credit is trying hard to catch up). The IRS estimates that there is an error on 25% (1 in 4) of all EITC claims and this costs the government $10 to $12 billion a year. Not good. Over the last few years, they have been ramping up attention on paid preparer EITC due diligence. (Over 70% of all EITC returns are prepared by paid preparers.) This new program will seek out both new and experienced preparers who's returns showed EITC errors. The idea is educate the preparer on their responsibility and requirements and if the problem continues to take legal actions. IRS contact could be by mail or in a office visit where due diligence records will be reviewed and the preparer's EITC errors are explained. If the problem continues, the IRS will then take stronger action. A preparer could be barred from preparing returns and face civil penalties. Besides having to face finding a new career, the preparer could be paying $100 for each EITC claim not documented by due diligence (that's just the start of the fines).The IRS is serious about cutting Earned Income Credit fraud and this program will hopefully shut down the EITC mills. But for taxpayers, protect yourself by looking at the rules for EITC and if you have any questions about your return, ask the preparer. If that doesn't clear up your concerns, find a new preparer. Remember, you will be responsible for payback of the bogus refund plus interest and penalties not the preparer.