Tax Prep — Refundable-Credit Due-Diligence (Form 8867)

Activate when: preparing any return claiming EITC, CTC/ACTC/ODC, AOTC, or Head-of-Household status; onboarding a paid-preparer workflow; a reviewer says 'did we document due diligence?', 'are we 8867-covered?', 'EITC audit risk.'. Do NOT activate when: no refundable credit / HOH is claimed; the return is self-prepared with no paid preparer; the question is purely tax-law calculation (use a calc tool, not this).

Industry front door for checklist. This variant only adds domain triggers, a worked example, and industry packs. The reasoning engine is the parent checklist skill — run its Process. Nothing in the parent is modified or duplicated here. Not legal or tax advice. Guardrails reflect general IRS requirements; verify against the current Circular 230, Form 8867 instructions, and IRC §6695(g) before filing.

Activate when: preparing any return claiming EITC, CTC/ACTC/ODC, AOTC, or Head-of-Household status; onboarding a paid-preparer workflow; a reviewer says "did we document due diligence?", "are we 8867-covered?", "EITC audit risk." Do NOT activate when: no refundable credit / HOH is claimed; the return is self-prepared with no paid preparer; the question is purely tax-law calculation (use a calc tool, not this).

Why this variant

The parent checklist turns fuzzy "did we cover everything" into a verifiable gate. Paid-preparer due diligence under IRC §6695(g) is exactly that: a per-credit documented gate whose failure = $635/return (2024, indexed) penalty each. This maps the parent's gate discipline onto the four due-diligence requirements.

Domain inputs → parent's checklist gate

The four §6695(g) requirements become the checklist's items:

1. Completion & submission of Form 8867 for each covered credit.
2. Computation — worksheets/records showing each credit was computed correctly.
3. Knowledge — no info appears incorrect/inconsistent/incomplete; document questions asked.
4. Record retention — keep 8867, worksheets, and the docs relied on (3 years).

Worked example

Single filer, 2 qualifying children, Schedule C cash income near the EITC-max plateau. → Knowledge requirement triggers: document the reasonableness inquiry into cash receipts/expenses, residency of children (school/medical records seen), and relationship. Missing any = incomplete gate → do not file; return to intake.

Compliance anchors

• IRC §6695(g) · Form 8867 & instructions · Circular 230 §10.22 (diligence) · Pub 4687 (paid preparer due diligence).

Packs

• Solo preparer: minimum viable 8867 evidence folder per client.
• Firm/season: reviewer sign-off gate before e-file release; sampling for QC.
• Enterprise: tie gate to e-file blocker in software; log ruleId per return.

Red flags

• Income sitting exactly at a credit's maximizing plateau.
• Inconsistent dependents vs prior year with no life-event explanation.
• Preparer "assumed" residency/relationship without any record.

Verification

• 8867 completed for every covered credit
• Computation worksheets retained
• Reasonableness inquiries documented (who/what/when)
• Contemporaneous notes on any inconsistency resolved
• Retention folder started (3-yr clock)

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Part of deciqAI Knowledge Skills — executable rigor for AI agents. Core method: checklist.

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Part of deciqAI Knowledge Skills — 189 open-source thinking skills that make rigor executable for AI agents. The same skills power every deciqAI agent, which runs them autonomously to operate your company. See it run → https://www.deciqai.com/c/tax-prep-8867-due-diligence · ⭐ Star the repo → https://github.com/deciqAI/knowledge-skills · Contributions welcome.