TAX PREPARER DUE DILIGENCE PRACTICE
TEST WITH CORRECT ANSWERS 2026
1.What is the minimum retention period for copies of Form 8867 according to IRS regulations?
One year from the filing of the return.
Two years from the filing of the return.
Three years from the filing of the return.
Six years from the filing of the return.
2. Why are Andreas and Briseis ineligible to claim the EITC despite having children with valid
SSNs?
They do not meet the income requirements.
They do not have any qualifying children.
They have ITINs, which disqualifies them from claiming the EITC.
They are not married.
3. If a tax preparer discovers inconsistencies in a client's information after submission, what
is the appropriate course of action according to due diligence requirements?
The preparer should make additional reasonable inquiries to clarify the inconsistencies.
The preparer should contact the IRS directly about the inconsistencies.
The preparer should ignore the inconsistencies and proceed with the filing.
The preparer should ask the client to sign a waiver regarding the inconsistencies.
4. What is the primary purpose of Form 8867 in the context of tax preparation?
To report self-employment income.
To file a tax return for individuals.
To request an extension for filing taxes.
To document due diligence for claiming certain tax credits.
5. Who is responsible for meeting the performance standard set by IRS regulations for tax
returns related to EITC, CTC, and other credits?
TEST WITH CORRECT ANSWERS 2026
1.What is the minimum retention period for copies of Form 8867 according to IRS regulations?
One year from the filing of the return.
Two years from the filing of the return.
Three years from the filing of the return.
Six years from the filing of the return.
2. Why are Andreas and Briseis ineligible to claim the EITC despite having children with valid
SSNs?
They do not meet the income requirements.
They do not have any qualifying children.
They have ITINs, which disqualifies them from claiming the EITC.
They are not married.
3. If a tax preparer discovers inconsistencies in a client's information after submission, what
is the appropriate course of action according to due diligence requirements?
The preparer should make additional reasonable inquiries to clarify the inconsistencies.
The preparer should contact the IRS directly about the inconsistencies.
The preparer should ignore the inconsistencies and proceed with the filing.
The preparer should ask the client to sign a waiver regarding the inconsistencies.
4. What is the primary purpose of Form 8867 in the context of tax preparation?
To report self-employment income.
To file a tax return for individuals.
To request an extension for filing taxes.
To document due diligence for claiming certain tax credits.
5. Who is responsible for meeting the performance standard set by IRS regulations for tax
returns related to EITC, CTC, and other credits?
