As they prepare tax returns for a client, Bestever CPA firm should make a reasonable effort to ensure that the taxpayer fills out the questionnaire completely. This is because, as stated in the Statements on Standards for Tax Services, the information provided determines a taxpayer’s taxable income, loss or liabilities, and the omission of such information may degrade the quality of the return (AICPA, 2009). Bestever bears the responsibility of certifying that the information provided is genuine and correct to the best of their knowledge. Despite having the responsibility to request any supporting data from the taxpayer, Tom, Bestever firm can rely on the information provided by Tom unless it appears inconsistent (AICPA, 2009). Tom, as the taxpayer, is responsible for ascertaining that the information he provided is correct.
To determine the viability of Tom’s information and request for an Earned Income Tax Credit (EITC), Bestever firm should interview Tom and fill in forms as required by the Internal Revenue Services Department (Irs.gov, 2017). These questions should determine the consistency of the information provided by Tom and the amount of EITC he should earn based on the number of dependents. During the inquiry, Tom should provide substantive documents to support his claim of having eligible dependents. However, in cases where the dependents have not lived with him for more than half a year, Tom is not eligible to claim the EITC despite having supported the children (Irs.gov, 2017). In cases where Bestever firm finds inconsistencies in the information provided by Tom and requires more than three days to complete the filing process while following all ethical requirements, the firm may request Tom to file for an extension of the period. To request the extension, Tom will be required to fill out form 4868, which is the automatic request for an extension to file individual income tax returns (Treasury Department, 2014).
References
AICPA. (2009). Statement for Standards for Tax Returns: American Institute for Certified Public Accountants. New York.
Irs.gov. (2017). Form 8867: Paid Preparer’s Due Diligence Checklist. Retrieved 8 April 2018, from https://www.irs.gov/pub/irs-pdf/f8867.pdf
Treasury Department. (2014). Regulations Governing Practice before the Internal Revenue Service. Retrieved April 08, 2018, from Internal Revenue Services: www.irs.gov
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