Is there a limit on how much you can be penalized for lack of due diligence for eitc aoc eictc etc..what if i have 2000 returns?

Forum|Forum|6 years ago
December 7, 2019
5 replies
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i need to know if there is a limit on the amount of penalty an irs auditor can assess to a preparer for due diligence on eitc aoc hoh

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Best answer by rbynaker

As far as I know there are no limits in this area. IRC 6695 has $25K limits on various other penalties but there is nothing mentioned regarding a limit on due diligence. See paragraph (g):

https://www.law.cornell.edu/uscode/text/26/6695

There was someone who came through on this forum a few years ago who said she was assessed $30K+ in penalties and it put her out of business. Later it came out that this was not her first DD audit AND she was reporting all sorts of documents on the 8867s that she "relied upon" but did not actually look at or have copies on file.

rbynakerAnswer

Level 13

As far as I know there are no limits in this area. IRC 6695 has $25K limits on various other penalties but there is nothing mentioned regarding a limit on due diligence. See paragraph (g):

https://www.law.cornell.edu/uscode/text/26/6695

There was someone who came through on this forum a few years ago who said she was assessed $30K+ in penalties and it put her out of business. Later it came out that this was not her first DD audit AND she was reporting all sorts of documents on the 8867s that she "relied upon" but did not actually look at or have copies on file.