Each year I have people come into the office and say "So-and-So" can do my tax return cheaper. Many times I think of reminding them of the old saying, "You get what you pay for." This saying is particularly true with tax preparation. By law a paid preparer is required to sign each tax return he or she prepares. Ghost preparers who charge maybe $25 or $50 to prepare a return will refuse to sign a return. That is an immediate red flag revealing a paid preparer who only looking to make a fast buck. I recommend avoiding these unethical "ghost" tax return preparers.
Other warning signs of a "ghost" tax preparer include:
- Requiring payment in cash and not providing a receipt
- Inventing income to qualify their clients for the Earned Income Tax Credit and the Child Tax Credit
- Claiming fake deductions to increase the size of the refund
- Printing the tax return and telling the taxpayer to sign and mail the return to the IRS
- Refusing to digitally sign e-filed tax returns
- Having "self-prepared" entered in the paid preparers field
- Directing refunds into their bank account and not the taxpayer's account
Paid preparers and those assisting with federal tax returns must have a Preparer Tax Identification Number (PTIN). A paid preparer must sign and include their PTIN on the returns they prepare.
I encourage taxpayers to review their tax return carefully before signing. No matter who prepares your tax return, taxpayers are ultimately responsible for accurately reporting their income and deductions.
I will publish another blog on how to select a tax return preparer.