The IRS warns of 'ghost preparers' trying to rip off taxpayers

  • The IRS is warning taxpayers about a new scam in 2021: ghost tax preparers who won’t sign returns.
  • These ‘ghosts’ could fake income or deductions for a higher refund — and leave you responsible.
  • It’s one of a growing number of scams to look out for this tax season.
  • See Personal Finance Insider’s picks for the best tax software »

If someone else is preparing your taxes this year, the IRS has a warning about a new tax scam. “Ghost preparers” are promising higher refunds by faking information on tax returns, refusing to sign them, and leaving taxpayers responsible. 

Each year, the IRS adds new information to its site about reported tax scams. Last week, the agency released a warning about tax preparers falsifying information, promising higher returns by faking income and adding deductions you normally wouldn’t qualify for, then refusing to sign for their work where required on paper or digitally. 

Here’s what to look out for as you start to prepare your 2020 taxes.

Your tax return should include a tax ID and signature

The IRS urges taxpayers to watch out for any tax preparers who refuse to sign a prepared tax return — it could result in a taxpayer being held responsible for inaccurate information on the return or a refund being deposited to the wrong account.

Ghost preparers don’t sign for their work or include the required preparer tax identification number on a return. An unsigned return is a red flag that the preparer may be a so-called ghost, and may not have been accurate. Additionally, these tax preparers might require cash payment without a receipt, or fill in their bank information instead of the taxpayers’ bank information for direct deposit refunds, the IRS says.

As always, the IRS encourages taxpayers to check all tax returns for accuracy before signing and filing. Double check the direct deposit information, income information, and deductions section on your return. Ultimately, the taxpayer is responsible for all information on a return, not the preparer. Check the return’s information against your records — if you’re seeing red flags, report the preparer and file a complaint with the IRS.

This isn’t the first or only tax scam to be aware of this season

Each tax season brings its own unique set of tax scams, and that’s not new in 2021. 

Last year, the IRS warned of robo-calls and phishing scams across the country. Calls originating from Washington DC numbers alleged tax fraud and other misconduct, with an urgent message to return the call, Insider’s Tanza Loudenback reports. 

Other scams include letters from a made-up “Bureau of Tax Enforcement,” or scammers using stolen information to file a tax return, only to call and demand repayment of a refund. 

The IRS only uses snail mail to communicate with taxpayers, and the agency encourages taxpayers not to engage with anyone claiming to be with the IRS by online communication or phone. 

If you think you’ve been targeted by a ghost preparer or another scam, the IRS encourages taxpayers not to engage with the potential scammer, and report the activity. Filing your tax return early can help to reduce your risk of tax scams this season. File your tax return as soon as you have all the necessary documents to avoid scams, and make sure you’re prepared for this year’s tax deadline.

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