"Ghost" tax preparers not only waste filers' funds, but these schemes can cause serious problems in the long run.
In Canada? See BBB's Canada tips for avoiding ghost tax preparers.
"Ghost" tax preparers not only waste filers' funds, but these schemes can cause serious problems in the long run.
In Canada? See BBB's Canada tips for avoiding ghost tax preparers.
A "ghost tax preparer" is someone who isn't certified but still prepares tax returns. They may set up shop quickly and promise fast or big refunds.
In 2006, the IRS introduced the Preparer Tax Identification Number (PTIN) requirement to enhance oversight of tax preparers.
But some ghost preparers find a way around it by not signing the returns they file. But this system only works if tax preparers sign the returns they file.
Ghost preparers prepare the tax return, but when it's submitted to the IRS, they ask the taxpayer to sign their own return, making it look like it was self-filed.
According to the IRS, “The ghost preparer can print the paper return for their client and tell them to sign and mail it to the IRS. Or, for electronically filed returns, they will prepare it but won’t digitally sign it as the paid preparer.”
This doesn't seem like a big deal, until something goes wrong, and the preparer is nowhere to be found. Since the return is technically self-filed, the taxpayer is liable for any errors or omissions the ghost preparer made, including underpayment and negligence penalties, which often happens because the large refund promised was not accurate in the first place.
By law, anyone who prepares or even assists with preparing federal tax returns for compensation must have a valid Preparer Tax Identification Number (PTIN).
Tax preparers should sign the tax returns they prepare and include their PTIN on the tax return.
BBB Accredited tax preparers provide peace of mind when preparing for tax season. Search BBB.org to find a BBB Accredited tax preparer near you.
BBB wants to help you stay safe during tax season, so ask questions, be careful, and report anything that seems strange.