Tax season can become spooky season if you’re not careful about who is running the calculations. According to IRS estimates, ~$9.1 billion was caught up in tax fraud and financial crimes in 2024. While there are no concrete numbers, a chunk can be attributed to unscrupulous tax grifters known as “ghost preparers” who disappear with your money.
What Are Ghost Tax Preparers?
Ghost tax preparers are fraudulent individuals who prepare tax returns for others but refuse to sign them. By not signing, they leave the taxpayer solely responsible for any mistakes or fraudulent claims in the return. These scams take many forms, but they often follow a similar pattern.
How the Scam Works
The ghost preparer might entice you to work with them by listing fake deductions and credits on your return to make your refund look bigger than it really is. Many charge you a percentage of your expected refund, so the larger your refund looks, the more they get paid. Once your tax return is filled out, the ghost preparer might even take off with your refund, then disappear. When the IRS starts investigating, the ghost preparer is gone, and you're left responsible for any errors or fraudulent activity. You'll likely have to pay back the refund – even if your preparer stole it – plus interest and penalties.
To avoid detection, ghost preparers refuse to sign the tax return, leaving you as the only responsible party in the eyes of the IRS. This lack of a signature is a major red flag, as legitimate preparers are required to sign any returns they prepare.
As a final insult, since you gave the preparer your personal and financial information to file the return, they can also use that information to steal your identity.
How to Avoid Ghost Preparers
The IRS warns taxpayers to take these precautions:
Choose a Reputable Tax Professional
Check if the preparer has a valid Preparer Tax Identification Number (PTIN) using the IRS Directory of Federal Tax Return Preparers. Certified Public Accountants (CPAs), Enrolled Agents (EAs), and tax attorneys are legitimate professionals who are qualified to prepare tax returns and represent you before the IRS. Ask others for recommendations - Fiffik Law Group is happy to recommend trusted local tax professionals.
Be Wary of Unsolicited Tax Services
If a tax preparer reaches out to you with an unsolicited offer, be cautious. Scammers often target taxpayers with promises of large refunds or special tax credits.
Approach Refund Promises with Healthy Skepticism
No tax preparer can guarantee a refund before reviewing your financial situation.
Ask About the Service’s Pricing Structure
If fees are based on a percentage of your refund or they operate as a cash-only business, that’s another red flag, says the IRS. Tax accountants should charge a flat or hourly rate and provide receipts for their services.
Ensure They Sign the Return
A legitimate tax preparer must sign your tax return and include their PTIN.
What to Do If You Fall Victim?
No matter who prepares your tax return, you are legally accountable for its contents. If you suspect you have been scammed:
Report the Fraud to the IRS
File Form 14157 (Complaint: Tax Return Preparer) and, if applicable, Form 14157-A (Return Preparer Fraud or Misconduct Affidavit).
Monitor Your Credit
If identity theft is suspected, place a fraud alert on your credit report and monitor your financial accounts closely.
Consider an Identity Theft Protection Service
Protect your security with identity and credit monitoring. IDShield not only alerts you about threats, they’ll also work for as long as it takes to restore your identity to its pre-theft status.
Avoiding tax scams requires vigilance, especially during filing season when fraudulent preparers are actively seeking victims. While the promise of a bigger refund may be tempting, working with a legitimate, credentialed tax preparer is the safest way to ensure accuracy and compliance. If you suspect you've been targeted by a ghost preparer, reporting the fraud and monitoring your financial information can help mitigate potential damage.