Tax Litigation Law Office of Scott Kauffman
(949) 474-1820

Hackney Literary Award
Mighty River Short Story Contest Winner

Tax Day 2018 filing and a warning about ghost preparers

Today, is the last day to file your tax return or request an extension to avoid a late filing penalty. And no matter how close you are to the wire – if your envelope is postmarked April 17, the IRS will consider your return on time.

If mailing in a return and payment, upgrade to registered mail. This ensures you have documentation that you sent the return. And if you are heading to the post office yourself, make sure you are mailing your return to the correct address (IRS, P.O. Box 7704, San Francisco, CA 94120-7704 for Californians making payments).

Now, the warning about ghost tax preparation

Tax Day is as good of any to discuss some of the basics about selecting a reputable tax professional.

The IRS recently warned of “ghost” tax return preparers. These individuals offer their services - frequently at a lower cost - but then do not sign your return. Essentially, it appears that you prepared your own return.

Anyone who prepares tax returns needs to apply for a Preparer Tax Identification Number (PTIN). In 2018, the IRS issued roughly 737,000 to tax preparers across the country. Anyone paid to prepare a tax return must sign a return and include this number. 

Dishonest and unscrupulous

Ghost tax prep services can be part of fraudulent schemes with promises of big refunds. Shady preparers may request payment as:

  • A percentage of your refund, or
  • In cash without offering a receipt.

There are several serious risks from going this route. The first, is invented income or deductions to maximize credits. These schemes can trip IRS computers and trigger an audit when deductions are out of line with algorithms for certain industries or income does not match up with employer-provided W-2 or customer-provided 1099 documentation.

In the second, the preparer might suggest direct depositing a refund to his or her own bank account. This might be framed as a service, but it can become a way for an individual to skim. Reputable tax professionals will not offer this. A return should only have your routing and bank account number. If you do not have a bank account, you can request a refund be deposited to a pre-paid debit card, used to purchase a U.S. Savings Bond or sent by check in the mail.

If you have questions about filing a 2017 or prior year tax return, reach out to a seasoned tax professional for sound advice.

When the IRS contacts you about inconsistencies or errors in a return, get advice quickly. If an abusive tax preparer changed information after you reviewed the return, there are remedies. One is to report the tax preparer on Form 14157.

No Comments

Leave a comment
Comment Information