IRS rules require any paid tax preparer to sign the tax returns they prepare and to include their Preparer Tax Identification Number (PTIN) on the return. “Ghost” preparers break this law by refusing to sign or include a PTIN, often directing taxpayers to mail the return themselves or the preparers skip placing a digital signature on e-filed returns to avoid accountability.
IRS rules explicitly prohibit these practices. By law, anyone paid to assist in preparing a federal tax return must have a valid Preparer Tax Identification Number (PTIN) and sign the return.
Key IRS rules and consequences regarding Ghost Preparers include…
1 – Paid preparers must sign the return and enter their valid PTIN.
2 – Ghost preparers often invent income, claim false deductions, or promise large refunds to inflate fees from fraud. Preparers are generally prohibited from charging fees based on a percentage of the refund, as this often incentivizes fraud.
3 – The IRS can impose substantial civil penalties, secure injunctions banning them from preparing returns, and pursue criminal convictions. Those penalties, in certain instances, can surpass $75K per return
4 – Many times “Ghost” Preparers will direct refunds into their own bank account and then issue a “refund” to clients to ensure that they get paid their inflated fees from fraud.
5 – Other Red Flags include preparers who require payment in cash and who refuse to provide a receipt for the work completed. Sometimes they’ll even ask you to sign a return that isn’t yet complete.
Taxpayers are instructed by the Service to report Ghost Preparers using Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit and Form 14157, Complaint: Tax Return Preparer.
Let me leave you with this…
While the IRS primarily targets these preparers, the taxpayer is still legally responsible for the information on their return. Those difficulties can include but aren’t limited to…
1 – If the Ghost Preparer claims false deductions, credits, or income to increase a refund, the client may be liable for substantial accuracy-related penalties (up to 20% of the underpayment) or civil fraud penalties (75% of the underpayment).
2 – The client must pay back all underpaid taxes, plus interest, and any fraudulent refunds received.
3 – Returns prepared by these individuals often trigger IRS audits. When they find a Ghost Preparer, they normally audit all of the returns that they prepared knowing it’s an almost “Guaranteed” Cash Cow for them.
4 – Improper claims for the Earned Income Tax Credit (EITC) or other credits can lead to disallowed refunds and bans on claiming these credits in future years.
So take a minute and look at your returns from last year. The bottom of the first page should be signed by your accountant.
If it isn’t, I’m waiting for your call.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
Disclaimer: The content on our website or newsletter is provided solely for general informational purposes and should not be construed as tax, accounting, legal, investment, or professional advice of any kind. Accessing this information does not create, and is not intended to create, an accountant-client relationship. This information may not reflect the most current tax laws, accounting standards, or regulatory developments and may not apply to your specific jurisdiction or circumstances. It is not a substitute for consulting qualified professionals. Before making any decisions or taking any actions, you should seek advice from a professional who is fully informed of all relevant facts pertaining to your situation.
Tax-related content on this site is not intended, nor may it be used by any taxpayer, to avoid penalties that may be imposed under applicable tax laws. To comply with IRS requirements, we inform you that any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties or promoting, marketing, or recommending any transaction or matter addressed herein.
All information is provided “as is,” without any guarantee of completeness, accuracy, or timeliness, and without any warranty, express or implied, including but not limited to warranties of performance, merchantability, or fitness for a particular purpose. We disclaim all liability for any loss or damage arising from reliance on this information.
Links to third-party websites are provided for convenience only; we do not endorse or assume responsibility for their content. All materials are the property of our firm and may not be reproduced without prior written consent.