As taxpayers file their 2020 tax returns, they are reminded to avoid unethical ghost tax return preparers at all costs. Optima Tax Relief reviews why having a ghost preparer could be dangerous, and signs taxpayers should look out for in order to avoid them altogether.
A ghost preparer is someone who does not sign the tax returns that they have prepared. Some ghost preparers often print out the return and have the unknowing taxpayer sign and mail it off to the IRS on their own. A ghost preparer will also refuse to digitally sign as the paid preparer.
By law, anyone who is paid to prepare or assist in preparing a federal tax returns must also have a valid Preparer Tax Identification Number (PTIN). Paid preparers are required to sign and include their PTIN on the tax return. If a preparer refuses to sign the return that they prepared, they are most likely looking to make a quick profit by promising their clients a large refund. Taxpayers should also avoid preparers who are charging fees based on the size of an individual’s refund.
Ghost tax return preparers may also:
- Require payment in cash only and not provide a receipt.
- Invent income to qualify their clients for tax credits.
- Claim fake deductions to boost the size of the refund.
- Direct refunds into their bank account, not the taxpayer’s account.
Taxpayers should always review their return carefully and ask questions about anything that is not clear on their return before signing it and having it sent off to the IRS. A taxpayer should also verify their routing and bank account number on the completed tax return for any direct deposit refund. Taxpayers should also watch out for ghost preparers attempting to put their bank account information on the prepared return.
Taxpayers can report preparer misconduct using IRS Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.