BBB Tip: Avoid being “ghosted” by your tax preparer

Milwaukee, Wis. – Many of us have heard of being “ghosted” after a date, but have you ever been ghosted by your tax preparer? Unfortunately, many have, and they’re often met with serious consequences. “Black market” tax preparers set up shop around tax time, usually in a rental or short term location. They will often (but not always) promise fast or large refunds to filers. Also known as “ghost tax preparers,” these are uncertified individuals that bypass checks and balances in the tax preparer certification system. Commonly, the big refunds they promise are not calculated in legal ways.

In 2006, the United States’ Internal Revenue Service (IRS) made efforts to increase oversight of tax preparers to combat unscrupulous activity in the industry and began to require all tax preparers to have a PTIN, or a Preparer Tax Identification Number. But this system only works if tax preparers sign the returns they file. Some tax preparers that don’t want to follow the process, simply don’t sign the returns!

Ghost preparers actually prepare the tax return, but when it’s submitted to the IRS, they ask the taxpayer to sign their own return, making it look like it was self-filed. This doesn’t seem like a big deal, until something goes wrong and the preparer is nowhere to be found. Since the return is technically self-filed, the taxpayer is liable for any errors or omissions the ghost preparer made, including underpayment and negligence penalties, which often happens because the large refund promised was not accurate in the first place.

How do they do this? According to the IRS, “The ghost preparer can print the paper return for their client and tell them to sign and mail it to the IRS. Or, for electronically-filed returns, they will prepare it but won’t digitally sign it as the paid preparer.”

By law, anyone who prepares, or even assists with preparing, federal tax returns for compensation must have a valid Preparer Tax Identification Number (PTIN). Tax preparers should sign the tax returns they prepare and include their PTIN on the tax return.

Here are some red flags to watch for and tips to avoid being ghosted by your tax preparer:

• Be wary of those offering fast refunds or large returns. Your return amount, deduction amount, or taxes owed is solely based on your past year’s tax information and the current tax laws. The time it will take to receive your refund or tax notice, will depend entirely upon the IRS.
• Don’t sign your own tax return if asked by a tax preparer.
• Review your tax return before it’s submitted to ensure it was signed properly by your tax preparer.
• Only allow funds to be deposited into your personal accounts. Some ghost preparers will have funds deposited into their own accounts “to be later distributed.”
• Do your research! Check BBB.org for complaints and reviews on tax services in your area. Be cautious of “pop-up” and seasonal tax services. Don’t be afraid to ask about their processes, credentials, and for their PTIN. The IRS has resources to help you check those credentials.

Tax scams are very common during tax season. Following these tips, avoiding other common tax scams, and keeping your tax information secure can help keep your finances safe! Report “ghost tax preparers” to your local BBB or BBB’s Scam Tracker.

See our Tax tips and resources page.

For more information or further inquiries, contact the Wisconsin BBB at www.bbb.org/wisconsin, 414-847-6000 or 1-800-273-1002. Consumers also can find more information about how to protect themselves from scams by following the Wisconsin BBB on Facebook, Twitter, Instagram and YouTube.

ABOUT BBB: For more than 100 years, the Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2021, people turned to BBB more than 200 million times for BBB Business Profiles on 6.3 million businesses and Charity Reports on 25,000 charities, all available for free at BBB.org. There are local, independent BBBs across the United States, Canada and Mexico, including BBB Serving Wisconsin which was founded in 1939 and serves the state of Wisconsin.

NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. While it is believed to be reliable, Urban Milwaukee does not guarantee its accuracy or completeness.