INDIANAPOLIS –The individual tax season is upon us and while that may sound scary, dealing with a ghost tax preparer is downright frightening.
Ghost tax preparers are individuals who pose as trusted tax professionals, but mislead innocent taxpayers to unknowingly commit tax fraud. Often, ghost preparers promise a big refund or charge fees based on the percentage of an inflated refund, by claiming fake deductions or filing false information – all so they make a quick profit.
How does it work? A ghost tax preparer completes a tax return with false or inflated information, then refuses to sign it electronically or manually using their required Internal Revenue Service (IRS) issued Preparer Tax Identification Number (PTIN). By doing so, the return appears to be prepared by the taxpayer themselves, in order to keep the ghost preparer under the radar.
“Most tax preparers are highly-qualified and provide great service to Hoosier taxpayers. However, we always recommend customers to do their homework to ensure they are using a professional and trusted preparer,” advised DOR Commissioner Bob Grennes.
Ghost preparers often:
- Require payment in cash only and refuse to provide a receipt in order to leave little to no paper trail.
- Claim fake deductions or invent income that qualifies their clients for tax credits in an effort to boost the refund amount.
- Deposit the client’s tax refund into their own bank account.
“Even when working with a preparer, taxpayers are still responsible for return information that is submitted,” added Commissioner Grennes. “If a preparer promises an unusually large refund amount, charges fees based on a percentage of the refund, and/or refuses to sign or put their identifying information on the return, it is best to look elsewhere.”
DOR offers tips for individuals to consider when choosing a tax preparer:
- Ask for the tax preparer’s qualifications. The tax preparer must have an up-to-date IRS PTIN to charge for preparing tax returns.
- Do the research. Customers can find more information through the IRS’ Directory of Federal Tax Return Preparers with Credentials and Select Qualifications located on their website at https://irs.treasury.gov/rpo/rpo.jsf.
- Check their history. The Better Business Bureau, State Board of Accountancy and State Bar Association are great options to access the tax preparer’s history.
Additional tips on choosing a tax preparer can be found on DOR’s website at dor.in.gov/4618.htm.