Is a know-your-client check legally required for US tax preparers?

There is no single US rule that matches UK-style anti-money-laundering checks for tax and bookkeeping firms. The checks with a specific source are the e-file identity steps in Publication 1345 and the authentication the IRS describes for Forms 2848 and 8821. Everything else on this list is firm policy.

Do I need to collect beneficial ownership reports from LLC clients?

Not for US-formed companies. FinCEN's BOI page, updated August 11, 2026, says they are exempt under a final rule effective August 14, 2026. Foreign entities registered to do business in a US state or tribal jurisdiction can still be covered by the March 2025 interim rule unless exempt, so check FinCEN's page before you tell a foreign-formed client either way.

How long do I keep Form 8879 and the identity record?

IRM 3.42.5 says the ERO must retain Form 8879 for three years from the return due date or IRS received date, whichever is later. The IRS does not set a period for your identity log, so most firms keep it as long as the return file.

How can a client send ID without emailing it?

Use a secure client portal or upload link instead of email or text, and delete any ID a client sends by email after moving it into the client file. Your written security plan should say who can open stored ID images.

Know your client checklist for accountants (US)

01Who the individual is

Government photo ID for each taxpayerA clear photo of the front and back of an unexpired driver's license, state ID, passport or military ID for the taxpayer and for the spouse if filing jointly. Upload it through the secure form, not by email.TipCheck that the photo, name and date of birth match each other and match the person on your video call.
Social Security card or ITIN letterA copy of the Social Security card, or the IRS letter assigning the ITIN, for the taxpayer, spouse and every dependent. A W-2 or a prior-year return can stand in only when the name matches the card exactly.TipA name that changed at marriage but not at the Social Security Administration is the usual cause of an e-file reject.
Current mailing address proofOne recent utility bill, bank statement or lease showing the name and the address that will go on the return. An address that differs from the ID needs a one-line explanation.TipMail returned from the address on file is a signal to stop and ask, not to update the record silently.
Prior-year return or IRS noticeThe most recent filed return or an IRS notice in the client's name. You will check the name, filing status and address against what the client told you.TipA new client who says they never filed and has no IRS mail is a different engagement from a first-time filer.
Date of birth and filing-status answers OptionalHave the client confirm date of birth, filing status and who can be claimed as a dependent on your secure intake form. The Form 2848 and 8821 authentication steps record date of birth too. Do not accept ID numbers typed into email or text.
Prior preparer and reason for leavingThe name of the previous preparer or bookkeeper and why the client is switching. Ask whether any return or books are still unfiled or in dispute.TipClients who have changed preparers three years running often owe fees or have an unresolved notice.

02Who the entity is

EIN proof from the IRSThe CP575 notice, a Letter 147C (EIN Previously Assigned), or a digital CP575 downloaded from the client's Business Tax Account. A bank letter or a prior return is not proof of the EIN.TipIf the client lost the notice, the Business and Specialty Tax Line at 800-829-4933 can issue Letter 147C after authenticating the caller.
Formation documentArticles of organization or incorporation as filed with the state, with the file-stamp or filing date visible, and the state business-search printout showing active status.TipCompare the exact legal name on the state record to the name on the EIN notice. Mismatches cause rejected e-files.
Form W-9 from the entityA signed Form W-9 giving the entity's legal name, tax classification and Taxpayer Identification Number (TIN). The entity uses it to give its correct TIN to whoever must file an information return for it.TipCompare line 1 and the TIN to the CP575 or Letter 147C. A multi-member LLC showing an owner's SSN is a mismatch to fix.
Operating agreement, bylaws or partnership agreementThe signed, current agreement with all amendments. It shows who owns what, who can sign, and how profit is split, which the return and the books both depend on.TipIf the client says there is no written agreement, record that in the file and use the state default rules for the entity type.
Owner and officer list with percentagesA list of every owner with ownership percentage, role and whether they are a US person, plus any officer who signs for the entity. Flag anyone who controls the entity or can sign for it.TipNo federal rule sets an ownership percentage that preparers must verify. Pick your own cutoff, write it in the engagement letter, and apply it the same way to every client.
Responsible party confirmationThe name of the person the IRS has as responsible party for the EIN, taken from Form SS-4 or the client's records. The IRS requires a change in responsible party to be reported on Form 8822-B within 60 days of the change.TipAsk at intake and again after any sale or buy-out. The 60 days start when the person changes, so a business sold in March with no Form 8822-B filed still shows the old owner in November.
FinCEN beneficial ownership status OptionalAsk if the company was formed outside the US. FinCEN (page updated August 11, 2026) exempts US companies under a final rule effective August 14, 2026; the March 2025 interim rule still covers foreign entities registered in a US state, unless exempt.TipDo not treat 2024 and 2025 BOI guidance as current for US-formed clients. For a foreign-formed client, check FinCEN's exemptions first.

03Authority to act

Signed engagement letterA signed letter stating the services, the tax years covered and the fee, signed by the person with authority for that taxpayer or entity.TipFor an entity, the signer should appear on your owner and officer list. If not, ask for a resolution or agreement page.
Form 2848 for representationForm 2848, Power of Attorney and Declaration of Representative, needed when you will speak to the IRS for the client. On line 3 write the matter, form number and years, such as "Income, Form 1040, 2024 through 2026". "All years" gets it returned.TipFuture periods stop three years after December 31 of the receipt year. Representatives cannot endorse a government check, so never route a refund to your firm.
Form 8821 for information onlyForm 8821, Tax Information Authorization, when you only need to see transcripts or notices. It lets the firm receive information but does not authorize you to act.TipUse it for bookkeeping clients where you need payroll tax account history but will not negotiate.
Remote authentication record for Forms 2848 and 8821With no existing relationship and a remote e-signature, the IRS asks you to compare a photo ID to the person by video, record name, SSN or ITIN, address and date of birth, and check them against a tax return, IRS notice, Social Security card or utility bill.TipThe IRS says to keep records of the documents used. Filing the secondary document with the signed form is our habit.

04IRS e-file and identity theft checks

Identity Protection PINAsk if the client, spouse or any dependent has an IP PIN: six digits, valid one calendar year. A 2026 return filed in 2027 needs the 2027 PIN. Without an online account, AGI under $84,000 ($168,000 joint) allows Form 15227.TipThe IRS shows PINs online mid-January through mid-November, so the window closes soon and the 2027 PIN appears in January. Collect it at signing.
IRS letters the client did not expect OptionalAny Letter 5071C, 4883C or 5747C, which can arrive even if the client filed nothing. These letters ask the person to verify identity, and each one is a possible theft signal.
Form 14039 history OptionalAsk whether the client has ever filed Form 14039, the Identity Theft Affidavit, and when. If yes, ask for the IRS response letter and confirm an IP PIN is active.
Your own PTIN and EFINConfirm every signing preparer has a valid 2027 PTIN (renewal fee $18.75) and your EFIN acceptance letter is on file. An IRS e-file application can take up to 45 days to approve.TipGiven the 45-day approval window, a new preparer or firm should apply in the fall, not in January.
Tax year 2025 extensions still openAsk if the client filed Form 4868 for tax year 2025. The extension runs to October 15 and covers filing only, so a 2025 return not filed by October 15, 2026 is late; tax owed was due in April.TipAsk for the 2025 documents first and do not take on the 2026 engagement until the 2025 return is on a filing plan.
Form 8879 signing planDecide before preparation how the client will sign Form 8879 and give an e-file PIN: in person, or remotely through a signature tool. For identity steps, follow Publication 1345 as the IRS directs EROs.TipIRM 3.42.5 has the ERO keep each Form 8879 for three years from the return due date or the IRS received date, whichever is later.

05Red flags and what to do

Refund routed to an account not in the client's nameAsk for a voided check or bank letter showing the name on the account. A refund account in a third party's name, or a prepaid card, is a reason to pause the return and call the client on a number you already hold.TipWrite the decision and the call into the file notes.
Pressure to file fast or to skip IDTreat a prospect who refuses a video call, will not send ID, communicates only by text, or wants the refund before documents arrive as a decline. Say so in writing instead of negotiating.TipSend a short decline: "We cannot begin your return until we have verified identity under our standard process."
Unsolicited prospect with a link or attachmentThe IRS warns that scammers pose as prospective clients and send malicious links or attachments disguised as tax documents. Do not open a file from an unverified prospect on your main machine.TipReply asking them to use your secure upload link instead of attaching anything.
Income that does not fit the story OptionalLook for a W-2 whose employer you cannot find on a state business search, or a business whose bank deposits run far above its sales records. Neither proves fraud, so ask for the payroll record or the sales reports before you prepare anything.

06Your records and security

Written Information Security Plan on fileYour firm's plan covering who can see client IDs, multifactor authentication and breach steps. IRS Publication 5708 is a template, and FTC regulations require preparers to create and carry out a plan.TipName which staff have access to stored ID images.
Identity verification log for the client fileOne record per client: date, who checked, ID type, how the match was made, EIN proof seen, red flags reviewed and the accept or decline decision. Do not store ID numbers in the log.TipAdd a line for the state check, such as the state business-search status and date, so an expired or revoked entity shows up at the next renewal.
Breach contacts OptionalThe IRS says to report a data theft to your local IRS Stakeholder Liaison and to the state tax agency. Keep both contacts in the plan along with Publication 4557 and Publication 5293 as references.

Know your client checklist for accountants

01Who the individual is

02Who the entity is

03Authority to act

04IRS e-file and identity theft checks

05Red flags and what to do

06Your records and security

What firms get wrong

Get this checklist when it changes

Questions about this checklist

Sources

Ready to stop chasing?

01Who the individual is

02Who the entity is

03Authority to act

04IRS e-file and identity theft checks

05Red flags and what to do

06Your records and security

What firms get wrong

Get this checklist when it changes

Questions about this checklist

Related checklists

Bookkeeping client onboarding checklist

W-9 collection checklist

Tax preparer due diligence checklist for Form 8867

Related guides

Client onboarding software for accountants

Best CRM for accounting firms: what to check before you buy

Best proposal software for accountants: what to compare

Sources

Ready to stop chasing?