FRAUD RESOURCE CENTER
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 2019 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 tax prep fraudsters 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.
A tax preparer:
- Asks for payment in cash
- Does not give you a receipt
- Charges fees based on a percentage of the refund
- Wants the refund deposited in his or her bank account
- Marks your return as “self-prepared” or affixes a business label rather than signing the form by name
- Do confirm that your tax preparer has an IRS-issued 2019 PTIN. The IRS maintains a searchable directory of preparers who hold professional credentials or qualifications.
- Do check that the preparer has signed your return — or e-signed, if filing digitally — and included his or her PTIN.
- Do ensure that you can reach the preparer outside of tax season.
- Do carefully review the completed return and ask questions about anything that isn’t clear.
- Do check, if you intend to get your refund by direct deposit, that the return correctly lists your bank’s routing number and your bank account number.
- Don’t do business with someone who promises a big refund without fully reviewing your financial situation.
- Don’t sign a blank or incomplete tax form. Only sign after reviewing the completed return.
- Don’t open attachments or click on links in emails from tax preparers you don’t know.
- Don’t use a tax preparation website unless it lists a PTIN.
- Report fraudulent activity or misconduct by a tax preparer to the Internal Revenue Service using Form 14157 (Return Preparer Complaint). You also might need to submit Form 14157-A (Tax Return Preparer Fraud or Misconduct Affidavit).
- The IRS website page on Choosing a Tax Professional has information on selecting a tax preparer and resources for checking qualifications and credentials.
Published January 17, 2020
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