“Ghost” tax preparers not only waste filers’ funds, but these schemes can cause serious problems in the long run. A “ghost tax preparer” is someone who isn’t certified, but still prepares tax returns. They may set up shop quickly and promise fast or big refunds.
In 2006, the IRS introduced the Preparer Tax Identification Number (PTIN) requirement to enhance oversight of tax preparers, but some ghost preparers find a way around it by not signing the returns they file. This system only works if tax preparers sign the returns they file. Ghost preparers prepare the return, but when it’s submitted to the IRS they ask the taxpayer to sign their own return, making it appear to be self-filed.
This doesn’t seem like a big deal until something goes wrong and the preparer is nowhere to be found. Since the return is technically self-filed, the taxpayer is liable for any errors or omissions the ghost preparer made, including underpayment and negligence penalties. By law, anyone who prepares or even assists with preparing federal tax returns for compensation must have a valid Preparer Tax Identification Number (PTIN). Tax preparers should sign the tax returns they prepare and include their PTIN on the tax return.
Follow these tips to stay safe and avoid being ghosted by a tax preparer:
1. Be wary of those offering fast refunds or large returns. If someone promises quick refunds or big returns, be careful. Your return amount, deduction amount, or taxes owed are solely based on your past year’s tax information and the current tax laws. The time it will take to receive your refund or tax notice will depend entirely upon the IRS.
2. Don’t sign your own tax return if asked by a tax preparer. Never sign your own tax return if someone else prepared it. Legitimate preparers will sign it and include their PTIN.
3. Review your tax return. Before you send it, look through your tax return to make sure it was signed properly by your tax preparer, that it’s complete and that your information appears to be accurate.
4. Only allow funds to be deposited into your personal accounts. Some ghost preparers will have funds deposited into their own accounts “to be later distributed.” That can be a red flag.
5. Do your research. Check BBB.org for complaints and reviews on tax services in your area. Be cautious of pop-ups and seasonal tax services. Don’t be afraid to ask about their processes, credentials and for their PTIN. The IRS has resources to help you check those credentials.
6. Report unusual activity. If you see a ghost tax preparer or think something isn’t right, tell your local BBB or use BBB’s Scam Tracker.
