ORLANDO, Fla. – A federal judge recently sentenced a Central Florida man to 21 months in prison for his role in a tax preparation scheme.
As tax season begins, the IRS is warning taxpayers about ghost preparers - individuals who complete tax returns for others but refuse to sign them or provide an official identification number.
Former IRS Commissioner Danny Werfel spoke with News 6 about the risks.
“It’s very prevalent during tax season,” Werfel said.
Red flags to watch for
One of the biggest warning signs of an illegitimate tax preparer is a guarantee of a large refund before even reviewing a taxpayer’s financial information.
Werfel emphasized that these promises can be misleading.
“Any guarantee of a certain credit amount or a certain amount of money is a sure sign that this may be an illegitimate preparation service,” he said.
The IRS requires anyone who is paid to prepare or assist in preparing tax returns to have a Preparer Tax Identification Number, or PTIN.
Taxpayers should ask for this number in advance and verify it on the IRS website.
The PTIN must also appear on the second page of the tax return in the “Paid Preparer” section.
Risks of using a ghost preparer
Ghost preparers often manipulate tax returns to increase refunds fraudulently, sometimes by inflating deductions or reporting false business losses.
These tactics may seem beneficial in the short term but can lead to serious consequences for taxpayers, including audits and penalties.
In some cases, fraudulent preparers even redirect refunds to their own bank accounts.
“They will change the bank routing number on your return and have that refund directed to them rather than you,” Werfel warned. “So the issue with ghost preparers is to avoid them.”
Free tax help available
For those looking for trustworthy tax assistance, the IRS offers free help through certified volunteers.
Taxpayers earning $67,000 a year or less, individuals with disabilities and those over 60 may qualify for these services.
More information is available on the IRS website.
Taxpayers who believe they have fallen victim to a tax scam can report the fraud and seek assistance through official IRS channels.