INDIANAPOLIS –Tax season is upon us and while that may sound scary to many, dealing with a ghost tax preparer is downright frightening. Ghost tax preparers are dishonest individuals who mislead innocent taxpayers to unintentionally commit tax fraud. Often, ghost preparers promise a big refund or charge fees based on the percentage of the refund, by claiming fake deductions or filing false information to make a quick profit.
How does it work? A ghost tax preparer completes a tax return for a customer but will refuse to sign it electronically or manually using their Internal Revenue Service (IRS) issued Preparer Tax Identification Number (PTIN), which is required by law for all paid preparers. By doing so, the return appears to be self-prepared with no indication a paid preparer was used in completing the tax return in order to keep the preparer under the radar.
“By not signing the return, the tax preparer assumes no responsibility for any errors or false reporting,” explained DOR Commissioner Adam Krupp. “The customer is then on the hook for any future audit.”
Ghost preparers often:
- Require payment in only cash 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.
- Direct refunds to be deposited into their own bank account instead of the client’s account.
“Be sure to select a reputable tax preparer,” added Commissioner Krupp. “Customers should look out for any preparer who is promising large refund amounts, charging fees based on a percentage of the refund and/or refusing to put their identification information on the return. Most likely, those individuals are simply looking to scam the customer to make a quick buck.”
DOR offers tips for individuals to consider when choosing a tax preparer:
- Ask for your tax preparer’s qualifications. The tax preparer must have an up-to-date IRS PTIN to charge for preparing tax returns.
- Look them up. 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.