Due diligence documentation standards for preparers

Due diligence is not a form you complete at the end. It is the record of the questions you asked, the answers you received, and the documents that supported the position taken.

What belongs in every file

• Identity verification for the taxpayer and each dependent claimed.
• Source documents for reported income.
• Notes recording the questions asked and the client's responses.
• Support for credits claimed, including residency and relationship evidence.
• A signed engagement agreement and consent records.

Contemporaneous beats reconstructed

Notes written during the interview carry weight. Notes written after an inquiry arrives do not. Build documentation into the workflow so it happens without a separate decision.

Retention and access

Keep records for the required retention period, restrict access to staff who need it, and log who touched what. Documentation and data security are the same discipline viewed from two angles.