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ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – AVOID “GHOSTS” TAX RETURN PREPARERS

By Robert S. Schriebman

2019

Introduction

On February 8, 2019 the IRS issued an Information Release warning the public about "ghosts" tax return preparers. The IRS is wise to the behavior patterns of these unscrupulous return preparers who invent income to erroneously qualify the clients for tax credits or who claim fake deductions in order to assure their clients of large refunds. "Ghost" return preparers invite audits!

This article will review IR-2019-9 published by the IRS early this month.

Legitimate Tax Return Preparers

Over the past few years the IRS has taken steps to protect the taxpaying public from crooked tax return preparers. All preparers must have a valid 2019 Preparer Tax Identification Number or PTIN. A professional preparer is required to sign the tax return and include the PTIN. This rule applies to all types of tax returns, including income tax returns for individuals, corporations and trusts, payroll tax returns, and claims for refund. An electronic e-file return must also be digitally signed by the preparer.

What Does a "Ghost" Preparer Do or Not Do?

A "ghost" preparer does not sign the return. They just print the return and tell the taxpayer to sign it and mail it to the IRS. They refuse to digitally sign e-file returns. According to the IR-2019-9, a "ghost" preparer's objective is to make a fast buck by promising a big refund or charging the client a fee based upon the percentage of the refund. Honest taxpayers, ignorant of these practices, believe that the actions of the preparer are standard in the industry.

Signs of a "Ghost" Preparer

According to IR-2019-9 a "ghost" preparer looks to do the following:

  • Require payment in cash only and not provide a receipt.
  • Invent income to erroneously qualify their clients for tax credits or claim fake deductions to boost their refunds.
  • Direct refunds into their own bank account rather than the taxpayer's account.

Protect Yourself

The above three points are signs that you are dealing with the wrong tax preparer. Always examine your returns carefully. The first thing I do when I see a tax return, of any type, is to check if the return is signed by the preparer along with the PTIN. The IRS invites you to go on their website and check the status of your preparer through the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. Of course there will always be those whose greed motivates them to hire the services of a crooked preparer. They do so at their own peril.

Conclusion

If you believe you are the victim of a "ghost" preparer, you may file a complaint with the IRS by using IRS Form 14157 "Complaint: Tax Return Preparer."

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 40 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See "California Tax Collection Practice and Procedures" and "California Taxation Practice and Procedure," both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, "IRS Tax Collection Procedures – A Manual for Practitioners" published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, "IRS Tax Collection Procedures – A Manual for Practitioners" published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See "California Tax Collection Practice and Procedures" and "California Taxation Practice and Procedure," both published by Commerce Clearing House.

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