Chapter 3: Due Diligence in Tax Preparation
This chapter outlines the importance of due diligence in tax preparation, focusing on the need for tax preparers to verify client information, accurately report income and deductions, and maintain thorough documentation. It highlights how proper due diligence helps prevent errors, penalties, and audits while ensuring compliance with tax regulations.
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1.
Your client presents questionable documentation for a large deduction. What is the best due diligence step to take?
2.
A client is claiming a large number of dependents, but their explanation seems unclear. What should you do to meet due diligence requirements?
3.
A client informs you of a significant business expense that wasn't documented during the year. What is your due diligence responsibility?