Beware of ‘ghost’ tax preparers

The IRS is reminding everyone to avoid “ghost” tax return preparers.

Ghost preparers get their scary name because they don’t sign the returns they prepare. They are trying to be invisible to the IRS for some reason. However, by law, anyone who is paid to prepare or assist in preparing federal tax returns is required to have a valid Preparer Tax Identification Number (PTIN).

Paid preparers are required to sign and include their PTIN on the return. Not signing a tax return is a red flag that the paid preparer may be doing something illegal and trying not to be noticed by the IRS.

Ghost preparers can use many illegal activities which can cause you to have major problems with the IRS. They may be preparing fraudulent returns with the purpose of providing a big refund so they can charge large fees. Or they may be charging fees based on the size of the refund.

Unscrupulous tax return preparers may also require payment in cash and refuse to provide a receipt. They may invent additional income to qualify their clients for tax credits or create fake deductions to create a larger refund. They may also direct refunds into their bank account instead of yours.

The IRS urges you to review your return carefully and ask questions about anything not clear before signing, no matter who prepares your return. You should check the routing and bank account number on your tax return for any direct deposit refund.

The IRS urges everyone to choose a tax return preparer wisely. You may want to consider hiring a CPA or EA since they are highly trained and licensed tax professionals. An Enrolled Agent is the highest credential awarded by the IRS to any professional. EAs are required to pass a rigorous three-part series of tests which are known as the Special Enrollment Examination. This series of tests covers business and individual tax laws and representation matters.

The Choosing a Tax Professional page on IRS.gov provides information about preparer credentials and qualifications.

The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify tax professionals by type of credential or qualification.

If you suspect misconduct you can report it to the IRS using IRS Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

It is important to file a valid, accurate tax return since you are the one who is ultimately responsible for it.

An advantage of using a tax professional is that they may be willing to help you by calling the IRS on the Tax Practitioner Hotline. Normally they can get through to the IRS in a matter of minutes. However, tax season is an extremely busy time for tax professionals and it would be best for you to use the IRS website whenever possible.

David Zubler is a tax accountant and Enrolled Agent representing clients before the IRS with over 25 years of tax experience. He is the author of four tax books and is the founder and president of Your Tax Care. The company provides business and tax education to the public at its website, YourTaxCare.com. David can be reached at (865) 363-3019 or contacted by email at david@yourtaxcare.com.

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