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Tax Preparer Due Diligence: More Than Checking the Boxes

February 27, 2019

For most tax professionals, conducting due diligence is second nature, an automatic reflex much like breathing. When a function becomes this automatic, some practitioners may be lulled into a routine of “checking the boxes” and relying on information and knowledge gleaned from taxpayers in the past to prepare current year tax returns. Circular 230, found in Title 31 of the United States Code, contains the minimum ethical requirements tax practitioners are required to follow. Circular 230 §10.34(d) states tax practitioners must exercise due diligence when determining the correctness of a tax position, whether that position is presented orally or in writing. It also states that practitioners may generally, “rely in good faith without verification upon information furnished by the client.” However, this does not mean practitioners may take the word of the taxpayer without using prudence and discernment. Read more at CPA Practice Advisor.