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1 IntroductionWelcome to the Drake Software Manual for Tax Year 2008. The Drake Team has beenhard at work in 2008 to help ensure that tax season at your firm is a successful one.This electronic manual has been developed for Drake clients to provide clear, easy-tofindinstructions and guidelines for using the software. Use this manual in conjunctionwith other Drake resources such as the online and on-screen help features, tutorials,training, and phone support. Be sure to take advantage of our expanded index and theAdobe PDF “search” feature, both of which will help you locate information moreefficiently in 2009.IRS Changes & RequirementsEIC Due Diligence — The Taxpayer Relief Act of 1997 implemented paid preparerEarned Income Credit (EIC) due diligence requirements that included the completionand storage of Form 8867 (EIC Checklist), EIC worksheets, and documentation ofhow, when, and from whom the EIC information was obtained. The IRS has begunactively conducting compliance audits of paid preparers focused specifically on theEIC due diligence requirement. In 2007, Drake eliminated the use of default answerson the 8867 screen. In 2008, Drake has provided additional screens to help guide paidpreparers in the EIC due diligence process during the client interview. For informationon these new screens, see “EIC Due Diligence Screens” on page 131.Consent to Use and Disclose Tax Return Information — IRS Reg. 7216 providesguidance to tax preparers regarding the use and disclosure of their clients’ tax information.This regulation strengthens taxpayers’ ability to control their tax informationand to make informed decisions regarding the preparer’s use of that information.If tax return information will be disclosed to parties outside of the tax preparer’s firm,then these regulations must be complied with. Clients must sign the Consent to Use ofTax Return Information before the tax return is prepared, and they must sign the Consentto Disclosure of Tax Return Information before the tax information is disclosed toTax Year 2008 1