Preparer Due Diligence and Circular 230 Compliance

Categories: Ethics, IRS CE
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About Course

This self-study ethics program provides a comprehensive examination of the professional and ethical obligations of tax return preparers under Treasury Department Circular 230 and the Internal Revenue Code. The course covers the standards of conduct governing tax positions, the due diligence requirements for EITC and other refundable credits, preparer penalties, and the oversight role of the Office of Professional Responsibility.

 

Related Course: For the substantive rules behind the credits themselves — eligibility, calculation, and Form 8867 documentation for EITC, CTC, AOTC, and Head of Household — see Tax Credits and Due Diligence Compliance.

Related Courses

What Will You Learn?

  • Understand the legal and ethical responsibilities of tax return preparers under Circular 230 and the Internal Revenue Code.
  • Learn how to apply preparer due diligence rules for EITC, CTC, AOTC, and Head of Household filing status.
  • Identify when additional client inquiry and documentation are required.
  • Understand recordkeeping, PTIN, data protection, and written compliance procedures.
  • Recognize common IRS compliance risks, preparer penalties, CP2000 issues, and identity theft response procedures.
  • Apply practical risk-reduction steps to maintain a compliant tax preparation practice.

Course Content

Module 1 – Preparer Due Diligence Requirements
This module introduces the due diligence responsibilities imposed on tax return preparers under the Internal Revenue Code and Circular 230. Participants will learn the standards for reasonable inquiry, documentation requirements, and procedures used to verify taxpayer eligibility for common tax benefits.

  • Preparer Due Diligence Requirements

Module 2 – Circular 230 Standards and Ethical Responsibilities
This module examines the ethical and professional obligations imposed by Circular 230. Participants will review practitioner duties, conflicts of interest, standards for written advice, and responsibilities when errors or noncompliance are discovered.

Module 3 – Recordkeeping, Compliance Procedures, and Practitioner Conduct
This module covers record retention requirements, PTIN compliance, taxpayer data protection rules, and written compliance procedures. Participants will learn how proper documentation and internal controls support ethical tax practice.

Module 4 – Penalties, Violations, and Real-World Compliance Risks
This module reviews preparer penalties, disciplinary actions, common compliance failures, and IRS enforcement activities. Participants will learn practical strategies to reduce risk and maintain compliance in daily practice.

Final Assessment – Preparer Due Diligence and Circular 230 Compliance
This course covered preparer due diligence, Circular 230 ethics, recordkeeping, data protection, and preparer penalties. Participants reviewed Form 8867 requirements, reasonable inquiry standards, client documentation, CP2000 notices, identity theft issues, and common IRS compliance risks. Before taking the final exam, review all four modules. A minimum score of 70% is required to pass and receive the certificate.

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