The tax scams just keep on coming, don’t they? And here’s a doozy: ghost tax preparers.
The IRS describes ghost preparers as those who are paid to prepare a tax return but don’t sign it either electronically or on paper.
This is a key warning of a scam.
According to the IRS, this is how it works. The ghost preparer prints out returns for clients and tells them to sign and mail them to the IRS, but the preparer doesn’t include his or her own signature. For electronically filed returns, the ghost preparer won’t digitally sign them.
This makes the tax returns appear to be prepared by taxpayers. There’s no sign that a paid preparer was retained to do the work and that keeps them off the IRS radar.
Legitimate paid preparers, including those who assist in preparing, know that they are legally required to have a valid 2018 Preparer Tax Identification Number (PTIN). They are supposed to sign the returns and include their PTINs so that the IRS knows who they are. A paid tax preparer who does more than ten returns usually is required to electronically file them.
This tax season the IRS has issued more than 737,000 PTINs to tax preparers.
But bogus preparers, including the ghosts, engage in refund fraud and other scams. Some look to make quick money by promising big refunds and charging fees based on a percentage of the refund.
Other warning signs include preparers who want cash payments and don’t give receipts, doctor the returns by declaring an income amount that allows clients to qualify for tax credits or claim false deductions to facilitate a larger refund, or ensure that refunds go to their own accounts rather than taxpayers’ accounts.
How to avoid them
The IRS urges taxpayers to read their returns and ask questions if something isn’t clear or doesn’t seem accurate. For direct deposits, taxpayers should ensure that the bank routing and account numbers are correct.
Bogus or abusive preparers can be reported to the IRS on Form 14157, Complaint: Tax Return Preparer.
Taxpayers who think a preparer filed or changed their return without their consent should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.