As many Americans are gathering the information they’ll need to file their 2021 income tax returns, the Internal Revenue Service is warning taxpayers: beware of ‘ghost’ tax return preparers.
A ‘ghost’ tax preparer is someone who prepares your taxes but doesn't sign or put their information on your forms. This makes them virtually invisible and untraceable, which could potentially cause serious problems for taxpayers, who are ultimately held responsible.
By law, anyone who is paid to prepare federal tax returns must sign on the return with a Preparer Tax Identification Number (PTIN). Not signing a return is an immediate red flag that the preparer may be looking to make a fast buck, particularly if they are promising you a big refund and charging fees based on the size of the refund.
Here are the red flags that may help you identify a ‘ghost’ tax preparer:
- Requiring payment in cash only and not providing a receipt
- Inventing income to qualify clients for tax credits they aren't entitled to or claiming fake deductions to boost tax refunds
- Claiming fake deductions to boost the size of the refund
It’s vital for you to review your tax forms carefully and ask questions about anything that is not clear before signing. The IRS also warns that ‘ghost’ tax preparers may put their own bank account information onto tax returns in order to have your refund paid to them. Verify both your routing and bank account numbers on the completed tax return for any direct deposit refund. And ask the preparer you’ve hired to see their valid 2021 preparer tax identification number.
The IRS does offer some guidance to help avoid tax preparation scammers. The Choosing a Tax Professional page on IRS.gov website provides information about tax preparer credentials and qualifications. Taxpayers can report tax preparer misconduct directly to the IRS using IRS Form 14157, Complaint: Tax Return Preparer. Additionally, if you suspect that a tax preparer filed or changed your tax return without your consent, you should also file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.