Protect Yourself: Avoid "Ghost" Tax Return Preparers
01/18/2023
Protect Yourself: Avoid “Ghost” Tax Return Preparers
Protecting yourself against tax fraud can seem like a challenge. Not only do you have to protect yourself from false documentation and IRS impersonators, but you must also be wary of those you hire to prepare your taxes. Thankfully, the IRS and many others are pooling their resources to ensure that “ghost” tax return preparers don’t get their hands on your money or information.
What are “Ghost” Tax Return Preparers?
The term “ghost” tax return preparer refers to a scam where an individual, who may or may not be qualified to do so, prepares a victim’s taxes for a fee, but neglects to sign the tax return. Not signing the return makes the “ghost” preparer effectively invisible and untraceable. As they often make up income or other ways to increase your refund for their own benefit, not signing the return leaves the taxpayer liable for any lies perpetuated in the process. Furthermore, some “ghost” preparers will re-direct refunds owed the taxpayer to their own accounts. In this case, the taxpayer is not only having to worry about the lost refund funds, but for proving the fraud to the IRS.
Common methods “ghost” preparers use to lure victims include promising to get a large refund (usually by claiming deductions they are not actually entitled to), offering to take pay based on a percentage of the refund they promise, or only charging small fees. Taxpayers should also be wary of “pop-up” tax establishments unless they are offered by a proven, legitimate source.
How to Spot the Difference Between Legitimate and “Ghost” Preparers
| Legitimate | Illegitimate |
| Will sign then file tax forms | Will not sign then file on your behalf |
| Will list a valid Preparer Tax ID Number (PTIN) | Do not list or have a PTIN* |
| Offer a receipt for payment | Take cash and offer no receipt |
| Say not to contact the IRS |
*Important note: A preparer you do not pay is not required to have a valid PTIN
Resources for Taxpayers
The ultimate advice for avoiding a “ghost” tax return preparer is to be thorough in researching any preparer you may choose to use. There are many different types of tax return preparers such as public accountants, enrolled agents, attorneys and even some who do not have professional credentials. The IRS offers a helpful database of federal tax return preparers that lists their credentials and qualifications. Taxpayers can access the Federal Directory of Tax Return Preparers here: RPO Preparer Directory (treasury.gov).
However, if a taxpayer does hire a preparer and begins to doubt their legitimacy, there are several steps and resources available. First, is to check the directory or ask the preparer for their PTIN number for verification. Second, once the return has been prepared, double check the information listed. Check for a signature and valid PTIN, verify bank information for any direct deposit refunds, and do a complete review of the return before it is filed. Lastly, if a taxpayer believes they have been the victim of a “ghost” tax return preparer, use Form 14157 found here Form 14157 (Rev. 6-2018) (irs.gov) to file a formal complaint against the tax return preparer.
It can be difficult to navigate the various scams tax season can bring. However, there are many resources available that many people simply don’t know about, and The Savings Bank is here to help! Knowledge is power, and we want to empower people to feel safe when filing something as important as taxes.
How To Avoid Scams By Ghost Tax Preparers (aarp.org)
How to Choose a Paid Tax Preparer - Avoid "Ghost Preparers"
Ghost Tax Preparers | FTB.ca.gov
What are "Ghost Tax Preparers"? What You Need to Know | Taxfyle
Beware Ghost Tax Preparers This Tax Season | Drexel University
IRS: Don’t be victim to "ghost" tax return preparers | Internal Revenue Service