The IRS continues to investigate and scrutinize preparers of earned income credit returns.
The Service has mailed a new series of letters to those preparers suspected of making mistakes on 2011 returns that claimed the credit.
Two main problems noted in the letters are including children who don’t meet the relationship or residency requirements, as well as filing returns with questionable income and expenses shown on Schedule C. (Schedule C businesses are under increased scrutiny in the first place).
There is significant fraud perpetrated with EIC and so continued investigations unfortunately are warranted