The Internal Revenue Service advises taxpayers to be wise about the legitimacy of whoever prepares your taxes. Why? “Ghost” tax return preparers.
What is a “Ghost” preparer?
Ghost preparers do not sign the tax returns that they prepare. They print out the return and tell the taxpayer to sign and mail it in themselves. If it’s an e-filed return, the ghost still doesn’t follow protocol, and he refuses to digitally sign as the paid preparer.
When this happens, the IRS’ sees the return was self-prepared. The ghost tax preparer is undetected. Tax preparers will sometimes go as far as promising a large refund and charge the taxpayer a preparation fee based on a cut of that return, and that angle is illegal.
Here are some other things that ghost tax return preparers may do:
- They ask to be paid in cash and will not offer a receipt.
- They cook the books a little, coming up with some faux income, so the client qualifies for a tax credit.
- They claim fake deductions as a way to pump up the amount of the refund.
- They direct the tax refund to go to their bank account instead of the client’s. The IRS says some taxpayers gloss over the bank routing number and miss the diversion altogether.
The IRS and state tax agencies have shown little compassion to taxpayers when they are ghosted.
Bottom line – review your tax return carefully and be cautious.