1040 Due Diligence Compliance Checklist

______

Client Tax Year Preparer

Yes No

  1. Do you have controversial or aggressive positions taken on tax return?
  1. If so, do you have all material facts and do you conclude that your position is

appropriate? ______

b. Do you believe that the position is based on substantial authority? ______

c, Is your position adequately disclosed on return (this would not be required

if you believe that position is based on substantial authority)? ______

d. Have you advised the client of the position and possible penalties? ______

  1. Have you exercised reasonable care to provide appropriate and complete answers

to questions on the tax return (all schedules and forms)?______

3. Did you make inquiries to determine if the taxpayer has:

a. Maintained adequate books and records?______

b. Substantiation of travel, entertainment, gifts and listed property (Cell

phones, vehicles, computers, camcorder, digital camera)?______

c. Existence of bartering transactions?______

  1. Has due diligence been followed with respect to information or data furnished

by the client (e.g., compared 1099s, K-1s and W-2s to tax return entries and

other various documents)?______

  1. Did you advise the client about the possible tax consequences from incorrect or

Or incomplete information from pass-through entities?______

  1. Have you reviewed prior years’ returns relating to key issues such as an IRS

Audit disallowing T&E, charitable contributions, etc?______

  1. Have you reviewed correspondence from the IRS that may affect the

Preparation of the current return, such as audit reports?______

8. Have you become aware of any significant error omission in a prior years’ return? ______

9. Have you tested for the alternative minimum tax?______

  1. Has a copy of the return been furnished to the client and one maintained by the

preparer?______

  1. Has Form 8271 been included with the tax return and any tax shelter information

needed?______

  1. Is there a tax engagement letter, and has the tax return been completed in

accordance with the engagement letter?______

  1. Schedule B, Part III – Have you answered those questions applying to foreign

accounts and trusts (7a, 7b and 8)?______

14. Have you considered FBAR – Treasury Form TDF 90-22.1 reporting?______

15. Have you adequately considered Form 8938 Foreign Asset reporting?______

  1. Have you completed Form 8867, EITC due diligence, attached to the filed return

and kept a copy in your files (to be retained for 3 years from 6/30)?______

17. Have you met the requirements for E-filing tax returns for the year?______

  1. If not E-filing, have you completed and submitted Form 8948 with the tax

return explaining why you are not filing the return electronically?______

  1. If taxpayer has chosen to file their own paper return, have you retained a copy

of the taxpayers signed acknowledgement in your files?______

  1. Have you considered, in the financial analysis of the tax return, if the income

reported on the tax return is representative of the life style reflected by your

taxpayer (all non-taxable sources of income in workpapers)?______

21. Has taxpayer evidenced minimal essential coverage for health insurance for

all members of the household? ______

22. Has taxpayer received 1095 reporting documents from insurance company? ______

23. From employer? ______

24. Has taxpayer (s) indicated their unwillingness to have penalty calculated on

this tax return?______

25. If filing return without Form 1095, is taxpayer aware that when Form 1095

is received should there be any indication this return is filed in error, you have

advised them of the need to amend their original filing.______

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