Establish a Due Diligence Checklist to Stay Compliant

Gwennetta Wright
Oct 7
2 min read

Written by Dr. Gwennetta Wright

Why a Checklist is Essential

If you’re serious about protecting your tax business, a due diligence checklist is non-negotiable. This isn’t an extra step, it’s a safeguard. Without it, you’re leaving too much to chance, and when the IRS comes knocking, “I forgot” is not an excuse.

A checklist ensures you’re asking the right questions, collecting the right documents, and writing the right notes—every single time. It keeps you consistent, organized, and audit ready.

What Your Checklist Should Cover

Your due diligence checklist should walk you through the key areas that the IRS reviews most closely. At a minimum, include the following:

Dependents: Did you ask enough questions to confirm the relationship, residency, and support?
Support: Did you document how the client provided more than half of the household costs?
Household Info: Did you verify who lived in the home and for how long?
Credits: Did you note why each credit was given and how the client qualified?
Documentation: Did you keep copies or records that back up the information provided?

When you cover these areas, you’re building a file that tells the IRS you did your job.

The Power of Systems

A checklist isn’t just about compliance—it’s about running your business like a professional. It eliminates guesswork and creates a repeatable system you can rely on with every client.

When you use a checklist for every return:

You don’t forget important questions.
You don’t miss red flags.
You don’t second-guess yourself later.

And if the IRS ever reviews your files, they’ll see a clear, consistent process. That’s what keeps you compliant and confident.

Don’t wait until an IRS review to realize you should have had a checklist in place. Build one now, train your team on it, and make it part of your everyday workflow. It’s one of the simplest tools you can create, and it can save your business thousands of dollars in penalties.