IRS Publication 6089 – Earned Income Credit, Paid Preparer and Refund Anticipation Checks

IRS Publication 6089 – Paid tax preparers play a critical role in helping low- and moderate-income families claim the Earned Income Credit (EIC or EITC), one of the largest refundable tax credits available. However, claiming the EIC triggers strict due diligence requirements, and many preparers also offer refund anticipation checks (RACs) to help clients access funds faster.

IRS Publication 6089 (Rev. March 2025) serves as the official resource addressing both topics. It outlines responsibilities for paid preparers to ensure accurate EIC claims while navigating refund-related financial products.

This SEO-optimized guide summarizes key points from the latest IRS Publication 6089, due diligence rules, RAC considerations, penalties, and best practices for the 2025 tax year (returns filed in 2026). Always download the official PDF from IRS.gov for the most authoritative details.

Download IRS Publication 6089 PDF: https://www.irs.gov/pub/irs-pdf/p6089.pdf

What Is IRS Publication 6089?

Publication 6089, titled Earned Income Credit, Paid Preparer and Refund Anticipation Checks, targets paid tax return preparers. The March 2025 revision provides targeted guidance on:

  • Properly determining EIC eligibility
  • Meeting due diligence obligations
  • Understanding and responsibly handling refund anticipation checks (RACs) and similar products

The publication highlights risks when EIC claimants (often lower-income taxpayers) use fee-based refund products, which can reduce net refunds through high fees. It reinforces compliance to protect both preparers and clients.

Earned Income Credit (EIC/EITC) Overview for 2025 Tax Year

The EIC is a refundable tax credit that rewards work and reduces tax liability—or generates a refund—for eligible workers and families. For tax year 2025:

  • Maximum credits:
    • No qualifying children: $649
    • 1 qualifying child: $4,328
    • 2 qualifying children: $7,152
    • 3 or more qualifying children: $8,046
  • Income limits (earned income and AGI must be below these):
    • No children: $19,104 (single/HOH) or $26,214 (MFJ)
    • 1 child: $50,434 / $57,554
    • 2 children: $57,310 / $64,430
    • 3+ children: $61,555 / $68,675
  • Investment income limit: $11,950 or less

Eligibility also requires valid Social Security numbers, U.S. residency, and qualifying children (or none for the smaller credit).

Pro tip: Use the IRS EITC Assistant tool and Publication 596 for detailed eligibility rules.

Due Diligence Requirements for Paid Preparers (Form 8867)

When preparing a return claiming the EIC, paid preparers must satisfy four due diligence requirements under Treasury Regulation §1.6695-2:

  1. Knowledge — Interview the taxpayer, ask relevant questions, and document responses to verify eligibility.
  2. Record Retention — Keep contemporaneous records (questions asked, answers received, documents reviewed) for 3 years.
  3. Reasonable Inquiries — Make additional inquiries if information appears incomplete, inconsistent, or incorrect.
  4. Checklist Completion — Complete Form 8867, Paid Preparer’s Due Diligence Checklist, and submit it with e-filed returns (or attach to paper returns).

Failure to meet any requirement can result in a penalty per failure (currently around $635–$660, inflation-adjusted).

Publication 6089 emphasizes thorough documentation, especially for common EIC issues like qualifying child residency, relationship tests, and income verification. Preparers should review worksheets in Form 1040 instructions and avoid relying solely on taxpayer statements when red flags appear.

Refund Anticipation Checks (RACs): What Paid Preparers Need to Know

Refund Anticipation Checks (RACs) let clients pay preparation fees from their refund without upfront payment. The process typically works as follows:

  • The preparer (or affiliated bank) opens a temporary account.
  • The IRS direct-deposits the refund into that account.
  • Fees (preparation + RAC fee) are deducted.
  • The remaining balance is issued to the client via check, debit card, or transfer.

Unlike Refund Anticipation Loans (RALs)—short-term loans against the expected refund—RACs are not loans. However, both products often target EIC claimants and can significantly reduce the net refund through fees (typically $25–$60+ for RACs).

IRS Publication 6089 addresses RACs specifically for preparers:

  • Provide clear, written disclosures about fees and how the product works.
  • Do not pressure clients into RACs or use them to facilitate improper EIC claims (e.g., inflating income or dependents to generate larger refunds for fee collection).
  • Be aware that EIC claimants are a vulnerable population; high-pressure sales of refund products can lead to compliance issues.
  • Follow all electronic filing and direct deposit rules.

The IRS does not ban RACs but monitors them closely due to historical concerns about excessive fees and noncompliance. Preparers should prioritize client interests and consider free filing options like IRS Free File or VITA/TCE for eligible taxpayers.

Penalties and Compliance Risks

Non-compliance with due diligence or improper handling of refund products can lead to:

  • Due diligence penalties — Per failure (EIC, CTC, AOTC, or HOH status)
  • Accuracy-related penalties — For preparers and clients if claims are disallowed
  • Potential referral — To IRS Office of Professional Responsibility or criminal investigation in severe cases
  • Reputational damage — Loss of clients and EFIN issues

Publication 6089 stresses that strong due diligence protects your practice and helps clients receive the correct refund without future repayment demands.

Best Practices for Tax Preparers in 2025–2026 Filing Season

  • Use structured intake interviews and checklists.
  • Document everything contemporaneously.
  • Stay current with EIC rules via IRS EITC Central (irs.gov/eitc).
  • Offer transparent pricing and explain all refund options, including direct deposit to the client’s own bank account (often fastest and cheapest).
  • Consider alternatives to RACs for unbanked clients, such as prepaid debit cards or helping them open low-cost accounts.
  • Review IRS resources like Publication 4717 (Help Your Tax Preparer Get Your Tax Return Right) for clients.

For Taxpayers Using Paid Preparers

Ask your preparer about due diligence processes and request a copy of Form 8867 if EIC is claimed. Compare total fees (including any RAC fees) against free or low-cost options. Direct deposit to your own account usually maximizes your refund.

Important: This article summarizes IRS Publication 6089 and related guidance for informational purposes. Tax laws are complex and subject to change. This is not tax or legal advice. Consult a qualified tax professional, Enrolled Agent, CPA, or the IRS directly for your specific situation.

Download the latest IRS Publication 6089: irs.gov/pub/irs-pdf/p6089.pdf

Related IRS Resources:

  • Publication 596: Earned Income Credit
  • Form 8867 and Instructions
  • EITC Central for Preparers

Stay compliant, protect your clients, and prepare accurately this tax season. Questions about Publication 6089? Leave a comment or contact the IRS Practitioner Priority Service.

Last updated: February 2026, based on March 2025 revision of Pub 6089 and current IRS guidance.