Don’t Fall Victim to “Ghost” Tax Return Preparers!

An IRS news release, issued January 22, 2020, warned taxpayers not to fall victim to “ghost” tax return preparers this tax filing season.[1]

The IRS reminded taxpayers that a paid tax return preparer is required by law to have a valid Preparer Tax Identification Number (PTIN). The IRS clarified that a paid preparer must include their PTIN on the returns they prepare along with their signature.

According to the IRS, “unscrupulous ghost preparers” do not sign the tax returns that they prepare. Rather, they instruct the taxpayers to sign and mail their own returns. Similarly, in the case of e-filed returns, the IRS noted that the ghost preparer will also refuse to digitally sign as the paid preparer. The IRS emphasized that “[n]ot signing a return is a red flag that a paid preparer may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund.”

The IRS noted other common characteristics of ghost tax return preparers, including:

1. Only accepting cash payment and not providing a receipt for their services.

2. Fabricating income in order to claim tax credits for their client.

3. Increasing refunds by claiming fake deductions.

4. Routing refunds to their own bank accounts instead of the taxpayer’s account.

The IRS urged taxpayers to wisely choose preparers and directed them to resources on their website to help them identify legitimate preparers. Furthermore, the IRS indicated that qualified individuals may receive free basic income tax preparation with e-file from IRS-certified volunteers at Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites located throughout the country.

Furthermore, the IRS stated that taxpayers should: (1) review their returns carefully and question anything that isn’t clear to them before signing-no matter who prepares the return; (2) verify their bank account and routing numbers on their returns for any direct deposit refund; and (3) be on alert for ghost preparers inserting their own banking information on the returns.

Finally, the IRS encouraged taxpayers to report preparer misconduct by using IRS Form 14157, Complaint: Tax Return Preparer.

If you have any tax questions or concerns, contact Frost Law today at 410-497-5947.


Tags: Blog, Tax Crimes, Tax Topics