By law, anyone who is paid to prepare or assist in preparing federal tax returns must have a valid Preparer Tax Identification Number, or PTIN, must sign the return and include their PTIN.
But ‘ghost’ preparers do not sign the return. Instead, they print the return and tell the taxpayer to sign and mail it to the IRS, or, for e-filed returns, they prepare but refuse to digitally sign it as the paid preparer. Dishonest and unscrupulous ghost tax return preparers look to make a fast buck by:
- promising a big refund or charging fees based on a percentage of the refund, which is illegal, or
- requiring payment in cash only and not providing a receipt, or
- inventing income to erroneously qualify clients for tax credits or claiming fake deductions to boost refunds, or
- directing refunds into their own bank account rather than the client’s account.
In order to protect themselves, taxpayers should:
- review their tax return carefully before signing and ask questions if something is not clear;
- for electronically filed returns, sign Form 8879, “IRE efile Signature Authorization” BEFORE the return is filed, and
- for any direct deposit refund, be sure both the routing and bank account number on the completed tax return are correct.
Taxpayers can report abusive tax preparers to the IRS by using Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit. It is imperative that taxpayers protect themselves! Remember, once a tax return is filed, any data included in the return is the responsibility of the taxpayer, NOT the person that prepared the return.