Just before the tax-filing season came upon us, the IRS released a news article warning everyone to watch out for ghost tax return preparers.
Of course, they also gave their readers a quick reminder that a paid tax return preparer should have a PTIN (otherwise known as a Preparer Tax Identification Number). According to the IRS, a ghost preparer is a tax preparer that charges clients to file taxes but does not sign the tax returns they are submitting to the IRS (hence the term “ghost”).
The IRS noted that these ghost tax return preparers will refuse to sign the necessary documents. Instead, the ghost preparer requests the taxpayer to sign and send off their own returns.
This is a major red flag (which the IRS emphasized in their news post) and is a sure sign that the tax preparer might not be properly credentialed. Sometimes, they assure the taxpayer that they’ll receive a refund, or they base their fees on the refund amount. In the worst cases, they maximize the refund amount by filling out incorrect information to maximize their own fee.
Common Traits
Here are some common red flags that a potential tax payer should be on the lookout for. These include:
- Asking the taxpayer to pay in cash and not accepting digital transfers
- Never providing a receipt
- Falsely claiming deductions to boost the payout they receive
- Making up income so that the taxpayer (their client) qualifies for tax credits
- Ensuring that refunds are deposited into their bank account and not that of the taxpayer
How to Choose a Legitimate Tax Preparer
First of all, the taxpayer can visit the Choosing a Tax Professional section of the IRS website. Here they will find a wealth of information including how to figure out what kind of tax preparer is required, how they can check their credentials, how they can submit a complaint about a preparer, confirm their reviews on Google and other rating sites, enquire about their education. Tax payers should also ensure that the tax preparer is credentialed as a CPA or an enrolled agent. They should make sure the tax preparer is willing to sign the tax returns and also double check the bank account attached on the returns.
It is important that the taxpayer always inserts their routing and bank account on their return form, and they should also be mindful of the preparer if they attempt to switch it to their details.
Nobody wants to become a victim. If you are looking for quality tax preparation advice, our team at Robert Hall & Associates is here to help prepare your tax returns and advise you on your tax situation.
We recognize that tax season is often a stressful time for businesses and individuals alike. Our firm’s mission is to provide clients with innovative, yet practical tax solutions that improve profitability, anticipate needs and provide our clients with the highest level of customer service, resulting in a smooth, worry-free tax season. Some of our tax services include: