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Watch out for 'ghost' tax return preparers

Watch out for 'ghost' tax return preparers
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Benjamin Franklin once said, "In this world nothing can be said to be certain, except death and taxes." It might be time to amend that rule.

Since tax season is prime time for crooks, the saying should now include death, taxes and tax scams. We're just a little over a month into this year's tax season and swindlers are already out in full force. Last week they were caught targeting TurboTax users.

Now, the IRS says things are getting worse out there and are warning everyone to avoid "ghost" preparers. They could cost you big time.

'Ghost' tax return preparers are becoming a huge problem

According to the IRS, nearly 60% of taxpayers will hire a professional to help them file their returns. That number might go up this year after all the changes made to federal income taxes last year. That could stir up even more tax scams.

The IRS recently sent out a dire warning to all taxpayers: Don't be victim to a "ghost" tax return preparer.

What is a ghost preparer, you ask?

According to the IRS, they are scammers looking to make a quick buck by promising big refunds or charging fees based on a percentage of your tax refund. One thing to watch for is if they refuse to sign tax returns that they've prepared.

Here's what's happening. Anyone who is paid to prepare or assist in preparing federal tax returns is required by law to have a valid 2019 Preparer Tax Identification Number (PTIN). Also, paid preparers must sign the return and include their PTIN.

But ghost preparers don't sign the return. Instead, they print it out and tell the taxpayer to sign and mail it into the IRS. For e-filed returns, they prepare it but refuse to digitally sign as the paid preparer.

How to avoid falling victim to ghost preparers

The IRS is trying to make everyone aware of ghost preparers and the tricks they use to rip people off. Not signing returns isn't the only thing to watch for.

Other signs you might be dealing with a scammer:

  • Cash only - They might require payment in cash only and won't provide a receipt. This is a red flag to watch for. Every legitimate tax preparer should take other forms of payment besides cash and will definitely give clients a receipt.
  • Falsify information - If they invent income to erroneously qualify you for tax credits or claim fake deductions to boost refunds, run don't walk away.
  • Wrong bank account - Instead of directing refunds into the taxpayer's bank account, they send them to their own. This is just common sense. Your refund should always be sent to your bank account.

To counteract these shady practices, the IRS is urging taxpayers to review returns carefully before signing and be sure to ask questions if something doesn't make sense. For any direct deposit refund, make sure both the routing and bank account number on the completed tax return are correct.

When you need help preparing your taxes, the IRS can guide you to a legitimate preparer. Tap or click here to let the IRS help find the right one for you.

Reporting problems:

If you come across an a suspicious tax preparer, file a complaint with the IRS. Click or tap here to file Form 14157, Complaint: Tax Return Preparer.

If you suspect a tax preparer filed or changed your tax return without your consent, click here and file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

How to avoid work-at-home scams and make money with legitimate jobs

Have you ever wanted to work a side job to make a little extra money from home? Maybe you've dreamed of leaving your current job to work full time from the comfort of your own home. Sounds good, but how do you differentiate between scams and legitimate money-making jobs? In this episode of Komando on Demand, Kim takes a hard look at work-at-home scams as well as work at home success stories. Kim also gives some tips and advice on how to tell whether that job offer is legitimate or a scam.

Tap or click here to learn about legit work-at-home jobs.

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