Taxpayers need to avoid “ghost” tax preparers

The 2020 tax season has officially begun. As we do each year, we take time to recognize different scams that victimize taxpayers. One that the IRS recently highlighted is about the so-called “ghost preparer.” These are unscrupulous tax preparers who will prepare the taxes for the client, but they will not e-file the return (which preparers are legally required to do), nor do they digitally sign as a paid preparer (preparers must have a Preparer Tax Identification Number).

If this happens, the taxpayer can take the return to a reputable accountant or tax preparer to check the work and revise any questionable or illegal figures used in the return. The taxpayer can then sleep better, knowing that they avoided potential fines from the IRS. They can also be proud that they recognized a possible scam by someone trying to make a quick buck by any means necessary.

Spot the scammer ahead of time

There are many red flags that should give the taxpayer pause before they hire a potential ghost preparer:

  • They claim that they will get a huge return regardless of the circumstances
  • They insist on cash payment with no receipt offered
  • They invent income to qualify the taxpayer for tax credits
  • They create fake deductions that could land the filer in trouble
  • They direct the IRS to deposit the return in their account instead of the client’s

There are better options out there

The IRS provides many resources to help taxpayers prepare their federal return, or find an ethical professional who can do it. The Choosing a Tax Professional page is extremely useful, offering information about tax preparer qualifications and credentials. The IRS also has a directory of tax preparers that is helpful.

If someone finds that this information comes to them too late, it is advisable to contact an attorney who handles tax disputes. These legal professionals can help victims paying unreasonable fines and provide solutions for issues caused by the ghost preparer.