Tax season can be scary enough without the specter of unscrupulous tax preparers.
Shady operators that the Internal Revenue Service (IRS) calls “ghosts” don’t have a legally required Preparer Tax Identification Number (PTIN) and don’t sign the returns they work on, leaving their clients holding the bag for any filing falsehoods.
It’s more than just a paperwork problem. Ghost preparers set up shop around tax time in pop-up offices or pitch their services at community gathering places such as churches.
They lure customers with promises of big refunds, often basing their fees on a percentage of the refund. To inflate what you — and they — get back from Uncle Sam, they might invent income to falsely claim tax credits or fabricate deductions such as business, education or medical expenses.
By the time the IRS catches on, the ghost will have disappeared with your fee. Since only your name is on the return, fixing the “mistakes” is your responsibility. Along with paying the taxes you actually owe, you’ll be liable for any penalties and interest that accrued while you were in arrears.
Some ghost preparers take the scam a step further, stealing refunds outright by routing them into their own bank accounts. Other perpetrators of tax prep fraud work online, sending phishing emails that appear to be from tax pros, or creating impostor websites that claim to prepare and e-file your return.
“The site looks real,” the Federal Trade Commission (FTC) warns. But “it’s set up to collect personal information that can be used to commit fraud,” including identity theft. Take these precautions to help ensure that your tax return is in good hands.