A tax return review checklist small firms can run before the client sees the file

Treasury Circular 230 is the rulebook for practice before the IRS. Section 10.22 is diligence as to accuracy. Section 10.34 is standards for tax returns and papers, including when you may rely on what the client gave you. The Office of Professional Responsibility enforces Circular 230. AICPA members also follow the SSTS, including SSTS No. 2, Standards for Members Providing Tax Compliance Services, Including Tax Return Positions. (Circular 230 PDF, Office of Professional Responsibility and Circular 230, AICPA SSTS No. 1 through 4 (effective 1 January 2024))

Do not treat the checklist below as your firm's quality control manual. Edit it. Have the owner who signs returns say what "cleared" means. Software does not review. A person does.

A 1 to 5 person firm still needs a reviewer who did not key the return. If you are the only CPA, you still do not file the first draft. You wait, then you review your own work against a list, or you swap files with a trusted peer under a written arrangement your counsel likes. A senior preparer who did not prepare that file can do a mechanical pass. The signer still owns the positions.

• Name the reviewer on the job, not in Slack.
• The preparer cannot mark review done.
• If the owner prepared the return, the owner still runs the checklist after a pause. Same day key and send is how you miss a dependent who moved out.
• Capacity is not a reason to skip stage 6 on the tax season workflow. File an extension if the file is not ready.

Circular 230 section 10.36 tells the person with principal authority over the firm's tax practice to take reasonable steps so the firm has procedures for complying with Circular 230. A review queue is one of those procedures. It is not the only one. (Circular 230 PDF)

Section 10.22: a practitioner must exercise due diligence in preparing or assisting in the preparation of, approving, and filing tax returns and other IRS papers; in determining the correctness of representations to Treasury; and in determining the correctness of representations to clients about IRS matters. You may rely on another person's work if you used reasonable care in engaging, supervising, training, and evaluating them, as modified by sections 10.34 and 10.37. (Circular 230 PDF)

Section 10.34(a): you may not willfully, recklessly, or through gross incompetence sign a return you know or reasonably should know contains a position that lacks a reasonable basis, is an unreasonable position under section 6694(a)(2), or is a willful attempt to understate tax or a reckless or intentional disregard of rules. Section 10.34(d): you generally may rely in good faith without verification on information the client furnished. You may not ignore the implications of information furnished to you or actually known by you. You must make reasonable inquiries if the information appears incorrect, inconsistent with an important fact or assumption, or incomplete. (Circular 230 PDF)

SSTS No. 2, section 2.3 (Reliance on Information From Others): when preparing or signing a return, a member may in good faith rely on information from the taxpayer or third parties without verification. The member should not ignore the implications of that information and should make reasonable inquiries if it appears incorrect, incomplete, or inconsistent on its face or based on other facts known to the member. A member should consider one or more prior year returns whenever feasible. If the law imposes a condition for a deduction or other treatment, the member should make reasonable inquiries to determine whether the condition has been met. The preparer declaration does not require you to audit supporting data. Encourage the taxpayer to provide it. (AICPA SSTS No. 1 through 4)

SSTS section 2.2: before signing as preparer, take reasonable steps to obtain the information needed to answer required questions on the return. Do not omit an answer merely because it might prove disadvantageous. (AICPA SSTS No. 1 through 4)

Use this as the reviewer screen, not as a second organizer. Fail is a note, not a vibe.

Business returns get the same idea with a different first page: name, EIN, year, officers, book to tax, K-1 list. Do not pretend a 1040 list is an 1120-S list.

Notes live on the job in the practice tool, not in a highlighter on a PDF the preparer will lose. One note, one fact, one owner, one due date. The preparer clears it. The reviewer marks cleared. Admin does not "fix" a number on a reviewed return.

Batch notes. Do not drip three emails. The client facing chase, if a document is missing, uses the same missing list you already run in season. Review is not a new document request system.

SSTS section 2.3.9 says a member should use prior year returns in preparing the current return whenever feasible. Prior returns help you see general tax status, avoid omitting or duplicating items, and treat similar transactions consistently. How deep you compare income and deductions between years depends on the circumstances. (AICPA SSTS No. 1 through 4)

• Open last year and this year side by side before you read the organizer.
• A new Sch C with no organizer note is a reasonable inquiry, not a shrug.
• A W-2 employer that vanished needs a reason (job ended, name change, still missing).
• Estimates on last year and none on this year is the reminder log, not a mystery.

The return does not go to the client for signature while R notes are open, unless the note is parked with a date and the signer has said the return may still go. Authorization to e-file is the last cell. Circular 230 section 10.22 covers approving and filing. A signer who never looked is not diligence. Software that says "diagnostics clear" is not a reviewer.

Do not let an assistant, a tool, or a draft engine prepare, file, or sign the return. A person at the firm reviews. The CPA or other authorized signer signs. The taxpayer authorizes the e-file.

• Open notes: return stays in review.
• All notes cleared or parked: admin sends the return and the authorization.
• Signed authorization in the file: then file. Save the acknowledgement.

Download the 1040 review checklist. One sheet per return. Copy the note format into your practice tool. This is a process aid, not a legal standard and not tax advice.

The tax season operator drafts follow ups from open document notes. Your staff approve what goes out. Your CPA reviews and signs every return.

What is a tax return review checklist? A one page list a second person runs before the client sees the 1040. It is a process aid, not a legal standard and not tax advice.

Who reviews if you have no second CPA? Name a reviewer who did not key the return. In a one person firm that may be a later pass by the same person, with the checklist forced to wait overnight. The CPA firm tax season workflow is the pipeline this pass sits in.

When may the return go to the client? When review notes are cleared or parked with a date, and the signer has said the return may still go. Authorization to e-file is the last cell, not the first.