Unfortunately, the list of tax scams one must be wary of during tax season is fairly lengthy. And, though you should watch out for all the scams on that list, there’s one that is particularly prominent and sneaky, and has subsequently victimized many: ghost tax return preparers. Whether you’ve already finished your taxes this year or are rushing to get them checked off your to-do list, it’s important to be aware of this scam.
So, here’s all you need to know about ghost tax return preparers, and how to ensure that you avoid them.
What are Ghost Tax Return Preparers and Why Should I Avoid Them?
Overall, ghost tax return preparers are simply unethical tax return preparers. Rather than signing a tax return as the paid preparer, they refuse to sign it and instead instruct the taxpayer to do so and mail it to the IRS. They do this because the tax return was prepared fraudulently in order to gain a larger return.
Ghost preparers wrongfully prepare tax returns using a variety of fraudulent methods, such as inventing income to claim fake deductions. Ultimately, they earn money by promising a large refund and subsequently charging outrageous fees as a result, or charging fees based off of the percentage of the refund. However, fraudulent activity is used to prepare the return and gain a larger return, which is why they refuse to sign it. Ghost preparers can significantly hurt taxpayers, costing them a significant amount of both time and money once the return is discovered to be fraudulent, which is why it is important to avoid them at all costs.
Tell-Tale Signs of a Ghost Tax Return Preparer
Though identifying a ghost tax return preparer may be more difficult as this scam unfortunately becomes increasingly sophisticated, there are a few signs that can help you avoid this misfortune. Typically, ghost tax return preparers will:
- Demand a payment in cash only and neglect to provide a receipt
- Promise a huge tax return
- Fail to have proper credentials and qualifications which a tax preparer should have
- Redirect tax refunds into their own bank account rather than the taxpayer’s
- Use dishonest methods to boost the refund
- Refuse to sign the tax return or digitally sign it for e-filed returns
Ultimately, when it comes to taxes, remember the common saying that it is better to be safe than sorry. Be incredibly careful when choosing a tax preparer; ensure that they are professional and credible, and have proper credentials and qualifications, and do your research on that individual before hiring them. Lastly, before signing your tax return, be sure to review it carefully, and don’t hesitate to ask questions if something is unclear.
What to Do if You are a Victimized by a Ghost Tax Return Preparer
Though there isn’t much you can do to reverse the damage caused by a ghost tax return preparer, you can report this individual to the IRS if you fall victim to one. Simply fill out the Form 14157, Complain: Tax Return Preparer. Or, if you believe that a tax preparer filed or altered your tax return without your consent, file the Form 14157-A, Tax Return preparer Fraud or Misconduct Affidavit.
Avoid Ghost Tax Return Preparers With Our Trusted Services!
For several years, our team at Steward Ingram & Cooper PLLC have assisted countless individuals and small business owners alike in preparing their tax returns. We place integrity at the forefront of all our actions to bring about excellent results while still fulfilling your tax compliance.