Note: The following is the text of Letter 5271 the IRS sent out to selected tax return preparers nationwide in December 2015.
Our data indicates you prepared income tax returns for tax year [year] claiming the Child Tax Credit and Additional Child Tax Credit. The procedures for claiming these credits were modified for tax year 2012 with the creation of Form 1040, Schedule 8812, Additional Child Tax Credit. As a paid preparer, you're responsible for ensuring your clients' returns comply with IRS requirements.
We are providing you with educational assistance and awareness of the new Schedule 8812 requirements, which will help you prepare accurate returns when claiming the credits mentioned above. Schedule 8812 has four parts and your clients' circumstances will determine which parts to complete. Please pay special attention to the requirements for each part next filing season.
Child tax credit reminders
To prepare an accurate Schedule 8812, you must ask your clients relevant and probing questions to help you determine if the credit is allowable. Taxpayers may not fully understand the tax laws and may incorrectly believe they can claim the credit for ineligible dependents. In general, to be a qualifying child for purposes of the child tax credit, the child must be a citizen, national, or resident of the United States. If the child isn't a U.S. citizen or national, you should ask your clients questions to identify whether the child meets the substantial presence test for establishing residency.
Return preparer responsibilities
A paid tax return preparer must take multiple steps to prepare accurate tax returns on behalf of clients. These steps are a preparer's due diligence and include reviewing the applicable tax law to establish the relevance and reasonableness of income, credits, expenses, and deductions on a return. Generally, you can rely in good faith without verification on information your client provides. However, you can't ignore the implication of the information you have. You must ask reasonable questions if the information appears to be incorrect, inconsistent, or incomplete.
You can find more information about Schedule 8812 at www.irs.gov, search “8812.” In addition, we recommend you review Schedule 8812 instructions.
We hope this letter increases your awareness of your responsibilities as a paid tax return preparer and provides you with information to prepare accurate Child Tax Credit claims for your clients.
Thank you for your attention to this matter.