ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – HEED THIS IRS WARNING: DO NOT USE A GHOST TAX RETURN PREPARER
By Robert S. Schriebman
On January 23, 2020 the IRS issued IR-2020-17, warning the public to avoid the use of a “ghost” tax return preparer. You could lose your tax refund to a thief and even expose yourself to an IRS audit. What is a ghost tax return preparer? It is someone who prepares a tax return, but does not sign it. It may also be someone who files your return, forges your signature, changes your bank account information, and steals your refund.
Here is what the IRS had to say about avoiding a ghost tax return preparer.
What the Law Requires
By law, a paid professional tax preparer, or someone who assists in the preparation of your tax return, must have a valid “Preparer Tax Identification Number.” (PTIN) The preparer must sign the return and include his/her identification information. An unscrupulous preparer may promise you a larger than legal refund or will charge you a fee based upon a percentage of the size of your refund.
According to IR-2017-17, ghost preparers may also do the following:
- Demand payment in cash and not give you a receipt
- Phony-up the amount of income in order to give you tax credits that you are not entitled to. Unlike a deduction, a credit is a dollar-for-dollar refund. Credits are always worth more than deductions.
- Invent phony deductions so you can get a larger refund – that is tax fraud! If you are audited there will be stiff large penalties and interest to pay in addition to the correct tax liability.
- Channel your refund into the preparers’ personal bank account and not your bank account. i.e., steal your refund!
On the IRS website, (IRS.gov) there is quite a bit of information that will guide you to choose a reputable tax return preparer. The IRS also has information about a specific preparer’s credentials and qualifications. There are also publications on the IRS website on choosing a reputable preparer that you can download for free.
Ultimately, what is on a tax return is your responsibility. Almost everybody who gets in trouble with the taxman blames his/her return preparer. That blame always falls on deaf ears when it comes to the IRS, FTB and EDD. If you hire a ghost tax return preparer, it may go bad for you. If you are cheated out of your refund, the IRS and the FTB are not going to be sympathetic and issue you a new refund. Review your return thoroughly before it is filed. If you have elected a direct deposit refund, verify the bank account number and the routing number to make sure it is yours and no one else’s. If you believe your preparer was not totally honest, consider filing a complaint for misconduct using IRS Form 14157, Complaint: Tax Return Preparer. If your return has been changed in any way without your consent by an unscrupulous preparer, consider filing IRS Form 14157-A: Tax Return Preparer Fraud or Misconduct Affidavit.
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.
Web Site Article 429