What is a Ghost Preparer?
Ghost preparers are someone who charges a taxpayer for tax preparation without signing the return. This someone may or may not hold a PTIN (Preparer Tax Identification Number). But, they are putting you at risk. It is required, by law, that a person who prepares a tax return must sign the return as the preparer of record, and maintain a current PTIN.
Ghost Preparers do not sign the returns they prepare so, they cannot be held accountable in case of preparer fraud. The IRS cannot track ghost preparers to find recurring issues, which puts your return at greater risk of being incorrect. Generally, a ghost preparer will promise higher refunds; they are able to do this as they unethically prepare your taxes leaving you at risk to be held accountable for their fraudulent work.
Ghost Preparers generally do not carry Errors and Omissions insurance, have a security policy in place or take any tax education classes. It is possible to hold a PTIN and not have any tax knowledge. Ghost preparers may obtain a PTIN by simply registering for one through the IRS and paying $39.95. Without proper insurance, continuing education, and verifiable experience a ghost preparer reaps the benefits of being a paid tax preparer without giving clients a safety net. Someone who relies on these ghost preparers is at full risk of being held liable by the IRS for everything that is entered into their tax return.
IRS issues Ghost Preparer Warning
In February 2021, the IRS issued a Notice regarding Ghost Preparers (Notice: IRS Tax Tip 2021-20) reminding tax payers to avoid unethical ghost preparers. Also, in February 2021 the IRS issued a 2nd new release warning taxpayers about the pitfalls of Ghost Preparers (IR-2021-30).
Boundless Advisors believes in increased oversight
This is an ongoing problem which will continue to plague the paid tax professional industry until Congress institutes minimum educations requirements for all preparers and stiff fines for not following the rules. Your hair stylist has hundreds of hours of education before she/he is able to cut hair and charge for that service. Why shouldn’t paid tax professionals have at least a minimum education requirement other than simply obtaining a PTIN? We offer several tips to choosing a tax professional.