With tax season approaching, the Internal Revenue Service (IRS) is again warning consumers and companies to avoid “ghost” tax return preparers. Are you a ghost preparer?
Tax preparer fraud is a perennial issue, and one which the IRS takes very seriously. All tax preparers in the U.S. are required to identify their role in preparing a return and must provide their Preparer Tax Identification number (PTIN). “Ghost” preparers are those who do not sign the returns they prepare and fail to provide their PTIN.
Unsigned, prepared returns are often flagged for further review. Frequently, these documents are found to be false income tax returns which could lead to an IRS audit and potential charges of filing fraudulent tax returns against the filer and the preparer—if the preparer can be found.
For ghost preparers, the value is in the fee charged to the taxpayer, often connected to the amount of the return that can be claimed. The preparer may counsel the taxpayer that they are eligible for additional deductions, expenses, or tax credits. By the time an audit or review is flagged and the taxpayer is notified, ghost preparers have closed up shop and moved on.
It is not only ghost preparers who create false tax returns. Reputable tax preparers who work independently or own their own tax preparation business can also create questionable tax documents using inflated loss figures, exaggerated expenses, and unsupportable deductions. For preparers creating fictitious income tax returns who remain in the business community, an investigation by the IRS can be professionally and personally devastating.
Although the taxpayer is liable for ensuring their prepared tax return is accurate and correct, the IRS pursues tax preparers who commit tax fraud whether or not their clients are aware of the fraud.
Given the civil and potential criminal penalties associated with tax preparer fraud, it is important to take stock of your own practices at the outset of the 2022 tax season. If you are aware of improprieties in returns you have already filed, it is a good idea to speak with an experienced tax defense attorney to review your practices—before the IRS decides to do it for you.
Speak with our experienced tax attorneys if you are facing an IRS audit or criminal tax charge
The legal team at Robert J. Fedor, Esq., LLC delivers strong representation and guidance for those facing tax litigation, payroll tax issues, or compliance questions. We work with local and international clients from offices in Cleveland and Chicago. Call 800-579-0997 or contact us online today.