With the start of the 2020 tax filing season near, the Internal Revenue Service is reminding taxpayers to avoid unethical “ghost” tax return preparers.

According to the IRS, a ghost preparer does not sign a tax return they prepare. Unscrupulous ghost preparers will print the return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost will prepare but refuse to digitally sign as the paid preparer.

By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a fast buck by promising a big refund or charging fees based on the size of the 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.

The IRS urges taxpayers to choose a tax return preparer wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification. Packey Law Corporation makes this list of qualified, competent tax preparers.

No matter who prepares the return, the IRS urges taxpayers to review it carefully and ask questions about anything not clear before signing. Taxpayers should verify both their routing and bank account number on the completed tax return for any direct deposit refund. And taxpayers should watch out for ghost preparers inserting their bank account information onto the returns.

Here are my thoughts on this matter.

Why would a preparer do a ‘ghost’ return? Could it be that they are not as well trained to do tax returns or that they have motives of deceit thus releasing themselves from liability of a bad tax prepared return? Over the years, there have been some very unscrupulous tax preparers who have swindled refunds from the taxpayers by providing some of the tax refund to the taxpayer then changing the return afterward to include a much higher refund deposited into the preparers bank account. Unethical and illegal. These are the preparers nobody wants, they are nothing more than scam artists.

Keep a few things in mind when having your tax returns prepared. Bad advice will most likely come back to bite you later such as claiming someone’s else’s children on your tax return. IRS will sanction fines against preparers who file bad returns as well as you as the taxpayer.