Beware Of Ghost Tax Preparers: Five Warning Signs You Shouldn’t Ignore
Choosing a tax preparer is about more than finding someone who promises a large refund.
A recent report from the Treasury Inspector General for Tax Administration (TIGTA) found that suspected “ghost preparers” were connected to thousands of tax returns seeking approximately $179 million in potentially fraudulent refunds over tax years 2023 and 2024.
Ghost preparers are paid tax return preparers who fail to sign the returns they prepare or provide a valid Preparer Tax Identification Number, or PTIN. That lack of accountability should be an immediate warning sign.
Why Ghost Preparers Are a Problem
TIGTA identified 47 potential ghost preparers associated with 6,352 tax year 2023 returns seeking more than $94 million in refunds. Another 65 potential ghost preparers were linked to 6,444 tax year 2024 returns seeking more than $85 million.
The returns showed characteristics associated with an overstated withholding scheme that the IRS has identified as a tax scam.
The concern isn’t simply that a preparer may disappear after filing the return. Questionable preparers may encourage taxpayers to claim credits, deductions or other tax benefits for which they do not qualify—and in some cases may even divert or steal refunds.
Most importantly, taxpayers are still responsible for the information reported on their returns, even when they paid someone else to prepare them.
Five Warning Signs of a Questionable Tax Preparer
1. They refuse to sign your return.
A paid tax preparer generally should sign the return and include a valid PTIN. If someone prepares your return but wants it to appear as though you prepared it yourself, that’s a major red flag.
2. Their fee is based on the size of your refund.
Be cautious of anyone whose compensation increases when your refund increases. That can create an incentive to inflate deductions, credits or withholding.
3. They promise an unusually large refund before reviewing your records.
No reputable tax professional can know exactly what refund you’re entitled to without first reviewing your income, deductions, credits and other relevant information.
4. They encourage you to claim deductions or credits you don’t understand.
Never sign a tax return containing information you cannot verify or explain. Ask questions before filing.
5. They won’t give you a complete copy of your return.
You should receive a copy of the return you file, including supporting schedules and forms. Keep it with your tax records.
The Person Preparing Your Return Matters
The TIGTA report found broader problems beyond ghost preparers. Across tax years 2023 and 2024, investigators identified more than 2,000 preparers potentially involved in an overstated withholding scheme, associated with more than 78,000 returns requesting over $740 million in refunds.
Those numbers illustrate why choosing a tax preparer based solely on price or the promise of a large refund can be risky.
A trustworthy tax professional should be willing to explain what is being reported, answer questions, identify themselves on the return and stand behind the work they prepare.
Why Partner With Fast Forward Accounting Solutions?
At Fast Forward Accounting Solutions, tax preparation isn’t treated as a one-time transaction.
Working with an established accounting professional means having someone who understands your financial situation, helps you maintain accurate records and prepares your return based on the tax rules that actually apply to you.
That relationship can be particularly valuable when:
- Your income changes during the year
- You operate a small business or are self-employed
- You receive income from multiple sources
- You’re unsure whether a deduction or credit applies
- You receive an IRS notice or correspondence
- You need help planning ahead rather than simply filing a return after the year is over
The goal shouldn’t be to manufacture the largest refund possible. It should be to prepare an accurate return, claim every legitimate tax benefit available to you and reduce the risk of problems with the IRS later.
Don’t Hand Your Tax Return to Just Anyone
Your tax return contains some of your most sensitive financial and personal information.
Before hiring a preparer, make sure you know who you’re working with, understand what’s being reported and feel comfortable asking questions.
Fast Forward Accounting Solutions provides clients with something a ghost preparer cannot: accountability, continuity and a professional relationship you can rely on long after the return has been filed.
Source: Journal of Accountancy
