The IRS is racially profiling Dominicans and other Hispanic Tax Return Preparers says David Selig of Selig & Associates. Bronx, Brooklyn and NYC unfairly scrutinized!

Compared to the national average, Hispanic neighborhoods receive more Earned Income Tax Credits and have a disproportionate number of Head-of-Household filers. Accordingly, the IRS has implemented a clandestine computer scoring system that profiles certain demographics e.g. Hispanic single parent families with low incomes, viz. bodegas, restaurants, domestics and other unskilled laborers. According to Selig, this program unfairly targets Hispanics and improperly punishes Hispanic Tax Return Preparers. 

Aggressive Selig & Associates provides the mostaggressive tax representation allowed by law. Specializing in payroll,income and sales tax controversies for individuals, contractors,restaurants, bodegas and professional practices. 

EITC Due Diligence Law and Regulation Internal Revenue Code §6695 and related regulations set out the EITC Due Diligence requirements and the penalties for failure to comply with them.

IRC §6695(g) states that any person who is a tax return preparer with respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretary by regulations with respect to determining eligibility for, or the amount of, the credit allowable by section 32 shall pay a penalty of $500 for each such failure. IRC §6695(h) allows a cost-of-living adjustment. The penalty for taxable years beginning in 2015 is $505.

There are four due diligence requirements. Generally, if you prepare EITC claims, you must ask all the questions required on Form 8867, Paid Preparers' Earned Income Credit Checklist, as well as, ask additional questions when the information your client gives you seems incorrect, inconsistent or incomplete. Complete and submit the Form 8867 for all paper and electronic tax returns and for all other EITC claims. It is required for all EITC claims, the ones with a qualifying child and the ones with no qualifying child. Also, keep a copy of the completed form. Prepare and keep the worksheet showing how you computed the credit. The table below provides more information on your record-keeping requirements. 

You could be penalized for each time you fail to meet all four due diligence requirements for each EITC claim.

Among other things, Tax Return Preparers must:

Complete Form 8867, Paid Preparer's Earned Income Credit Checklist, to make sure you consider all EITC eligibility criteria for each claim you prepare.

Complete checklist based on information provided by your client(s).

For EITC EITC returns or claims for refund filed electronically, submit Form 8867 to the IRS electronically with the return.

For EITC returns or claims for refund not filed electronically, attach the completed form to any paper return you prepare and send to the IRS.

For EITC returns or claims for refund you prepare but do not submit directly to the IRS, provide the completed Form 8867 to your client to send with the filed tax return or claim for refund.

Complete the EIC worksheet from the Form 1040 instructions, or Publication 596, Earned Income Credit, or a form with the same information.  The worksheet shows what is included in the computation, that is, self-employment income, total earned income, investment income and adjusted gross income. Most professional tax preparation software includes the computation worksheet.

Not know or have reason to know any information used to determine your client's eligibility for, or the amount of EITC is incorrect, inconsistent or incomplete.

Make additional inquiries if a reasonable and well-informed tax return preparer would know the information is incomplete, inconsistent or incorrect

Know the law and use your knowledge of the law to ensure you are asking your client the right questions to get all relevant facts.

Document any additional questions you ask and your client's answer at the time of the interview.

FYI   To qualify for Head of Household filing status, taxpayers must be unmarried or considered unmarried at the end of the year, and have paid more than half the cost of keeping up a home for the tax year.

The Earned Income Tax Credit “EITC” is intended to help low-income earners with children. The EITC is a refundable tax credit, viz. redistribution of wealth scheme.

The IRS uses a computer scoring system to determine who will be audited, referred to as “DIF” viz. Discriminant Inventory Function System.

Aggressive Selig & Associates provides the mostaggressive tax representation allowed by law. Specializing in payroll,income and sales tax controversies for individuals, contractors,restaurants, bodegas and professional practices. 

Mission Statement Our mission is to win every tax case; to bring all of our tax, advocacy and legal expertise to every fight, and to serve our clients with integrity, honesty and perseverance.

Effective We settle contested tax audits, compromise tax debts and can resolve all marital tax issues including innocent spouse relief and separation of liability. 

Reasonable-Rates All tax representation is provided by a Federal Tax Practitioner and Licensed Attorney. To schedule a FREE face-to-face consultation, contact Selig & Associates today.