Question

All of the following are requirements for a Tax Professional to meet the due diligence knowledge requirement when preparing a return for a taxpayer claiming the Earned Income Credit, the Child Tax Credit/Additional Child Tax Credit, and/or the American Opportunity Credit EXCEPT __________.

Refusing to ignore the implications of information furnished to or known by the preparer.

Having no knowledge or reason to know that any information used in determining the taxpayer's eligibility for, or the amount of, a refundable credit is incorrect.

Contemporaneously documenting in the files the additional inquiries made and their taxpayer's responses to these inquiries.

Verifying and proving relationships claimed.

Answer 1

1. As per the due diligence knowledge requirement when preparing a return for a taxpayer claiming the Earned Income Credit, the Child Tax Credit/Additional Child Tax Credit, and/or the American Opportunity Credit, the tax return preparer is required to:

• Not ignore the implications of information furnished to or known by the preparer
• Have no knowledge or reason to know that any information used in determining the taxpayer's eligibility for, or the amount of, a refundable credit is incorrect
• Documenting in the files the additional inquiries made and their taxpayer's responses to these inquiries

However, it is nowhere mentioned in the due diligence requirements that the Tax return preparer is required to verify and prove the relationships claimed by the tax payer.

Hence, the answer is D