Understanding IRS Due Diligence Reviews: What Tax Professionals Need to Know
- Gwennetta Wright
- Sep 30
- 2 min read
Written by Dr. Gwennetta Wright
When most tax professionals think of due diligence, the first thing that comes to mind is filling out Form 8867 and checking the required boxes. While that’s part of it, the truth is that IRS due diligence reviews stretch much further than forms. They’re designed to take a close look at how you operate as a tax professional—and if your practice is truly compliant.
Beyond the Forms: What the IRS Really Looks At
A due diligence review isn’t just about whether you filed the right paperwork. It’s about how you run your tax office. Reviewers want to see that your systems, processes, and overall approach align with IRS standards.
That means they’ll look at things like:
How you interact with your clients during interviews
The way you structure and charge your fees
The educational background and training that prepared you to be a tax preparer
Whether your files and notes demonstrate clear, consistent, and accurate documentation
Simply put, the IRS isn’t only interested in the return, they’re interested in you as a professional.
What This Means for Your Practice
As a tax pro, transparency and attention to detail are your best defense. Everything from the questions you ask clients to the way you document their answers matters. Even if your numbers are correct, vague or incomplete notes can raise red flags.
Think of it this way: the IRS wants proof that you didn’t just take your client’s word for it, you verified, documented, and asked the right questions.
Turning Reviews Into Opportunities
I know the word “review” can feel intimidating, but here’s the shift in mindset: a due diligence review is your chance to showcase the integrity of your practice.
It’s your moment to demonstrate that you take compliance seriously, that your processes are thorough, and that you run your tax business with the professionalism the IRS expects.
🌟 Think of it like show-and-tell for your firm. Instead of fearing the process, embrace it as a way to prove that your business is solid, compliant, and ready for growth.
Final Thoughts
IRS due diligence reviews are comprehensive by design. They examine more than just forms; they examine your professionalism, your systems, and your ability to follow the law. The best way to prepare is to operate with honesty, clarity, and thorough documentation every single day.
When the time comes, you won’t just be ready, you’ll be confident.
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