Tips for consumers to avoid being ghosted by your tax preparer

Doing taxes can be confusing, and tax scams are common during tax season, but you don't want to get tricked by a ghost tax preparer. BBB wants to help you stay safe during tax season, so ask questions, be careful, and report anything that seems strange. 'Ghost' tax preparers not only waste filers' funds, but these schemes can cause serious problems in the long run.

What is a ghost tax preparer?

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.

What does a ghost tax preparer do? 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.

Tips to stay safe and avoid being ghosted by a tax preparer 1. Be wary of those offering fast refunds or large returns. If someone promises quick refunds or big returns, be careful. Your return amount, deduction amount, or taxes owed are solely based on your past year's tax information and the current tax laws. The time it will take to receive your refund or tax notice will depend entirely upon the IRS.

2. Don't sign your own tax return if asked by a tax preparer. Never sign your own tax return if someone else prepared it. Legit preparers will sign it and include their PTIN.

3. Review your tax return. Before you send it, look through your tax return to make sure it was signed properly by your tax preparer, that it's complete, and that your information appears to be accurate.

4. Only allow funds to be deposited into your personal accounts. Some ghost preparers will have funds deposited into their own accounts 'to be later distributed.' That can be a red flag.