When you hire someone to help prepare your federal income taxes, the IRS wants you to make sure they are not a “ghost preparer."
Read on for tips to recognize and avoid a problem.
WHAT IS A GHOST PREPARER?
A ghost preparer is someone you paid to handle your return who doesn’t sign it. As the IRS explains: anyone paid to help you with your federal tax return has to have a valid Preparer Tax Identification Number or PTIN. They must sign your return and include that number.
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“Typically, you can find this on the second page of your 1040 towards the bottom,” said Dallas-based tax preparer Duke Alexander Moore. “Is their signature there? If there's no signature there, and especially if it says self-prepared, that is the number one red flag.”
Moore said without a signature, you may be unable to track down the paid preparer if there’s an issue or question about your return.
LOOK FOR RED FLAGS
In addition to avoiding a preparer who doesn’t sign the return, the IRS said consumers should read the return carefully to make sure the numbers are correct. Is a preparer inventing income or deductions to boost the refund?
“If they're promising a big refund and they want a cut of it, that's another red flag,” said Clay Sanford, spokesperson for the IRS. “Go over the return with them before you sign it because you are responsible for the return, even if they put it together for you.”
The IRS says to be wary of preparers who require payment in cash and won’t provide a receipt. They may also direct refunds into their bank account, not the taxpayer's account. Before the preparer submits your return, verify the preparer is providing your correct routing and bank account number.
RESEARCH CREDENTIALS
When picking a paid tax preparer, get references and confirm their credentials. Consumers can use this IRS searchable directory of preparers with professional credentials recognized by the IRS.
You can read an overview of the different types of preparers from a CPA to an Enrolled Agent here.
You can find a list of professional organizations here that may also be able to help your research.
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