We’re seeing a lot of confusion around Form 8867, specifically Part I, Question 6 and 7. The questions begin “Did you ask the taxpayer…”. For example, question #7 reads “Did you ask the taxpayer if any of these credits were disallowed or reduced in a previous year?”
We are noticing a trend of professionals answering ‘No’ to this question as they believe they are answering the question as if their client was not disallowed the credit. However, the IRS wants to know if you ASKED your client if the credits were disallowed.
If you did in fact ask your client, you should be marking this question as ‘Yes’.