What This Notice Means
This notice goes to paid tax return preparers. The IRS found possible issues on returns you prepared and is letting you know it will call you to discuss your due diligence requirements.
The returns involved claimed one or more of these:
- Earned Income Tax Credit (EITC)
- American Opportunity Tax Credit (AOTC)
- Child Tax Credit, Additional Child Tax Credit, or Credit for Other Dependents
- Head of household filing status
What to Do Before the Call
- Review the rules. Internal Revenue Code section 6695(g) and Treasury Regulation section 1.6695-2.
- Check your process. How do you interview clients, document their answers, and keep records? Be ready to explain it.
- Fix gaps now. The goal is for you and your clients to avoid adverse actions.
Common Mistakes
- EITC: underreported wages or misreported Schedule C income and expenses.
- EITC: claiming children who aren't the client's child, sibling, grandchild, niece, or nephew, or who didn't live with the client more than 6 months.
- EITC: married clients who don't file jointly and don't meet the additional rules.
- EITC: household helpers with no matching Form W-2, 1099-MISC, or 1099-NEC.
- AOTC: no Form 1098-T, less than half-time enrollment at an eligible institution, no qualified expenses, four years already completed or claimed, or no degree or credential being pursued.
- CTC, ACTC, ODC: dependents who didn't meet the relationship, residency, or age requirements.
Take It Seriously
A call about your due diligence is a chance to show the IRS your process works. Know your files and your procedures before the phone rings. You can authorize a representative with Form 2848 to handle the contact for you.
If you're a preparer who received a CP593 notice and want help preparing for the IRS call, call us at (813) 229-7100.