The Dangers Of Ghost Tax Preparers And How To Find A Reputable One
As tax season looms, like a rogue decimal point at the end of a long ledger, you know it’s a time for sighs, paperwork, and, hopefully, a nice little refund bump in your bank account. But before you hand over your W-2s to just anyone promising the biggest refund, hold on – because some tax preparers can put you on a very painful path of IRS audits and penalties.
I’m talking about ghost tax preparers. These shady characters, lurking in the shadows of strip malls and online classifieds, promise quick refunds and hefty returns but leave you with nothing but chills and IRS audits down the line.
What are ghost tax preparers?
Ghost tax preparers are people who do your taxes but don’t put their name or Preparer Tax Identification Number (PTIN) on your return. They may tell you to sign and mail your return yourself, or they may file it for you using a fake or stolen PTIN. They may also divert your refund to their own bank account or charge you a percentage of your refund as their fee.
Why are ghost tax preparers dangerous?
Ghost tax preparers are dangerous because they are not accountable for the quality or accuracy of your return. They may make mistakes, leave out information, or claim bogus deductions to inflate your refund and their fee. They may also expose your personal and financial information to identity theft or fraud.
If the IRS audits your return or finds any issues with it, you will be liable for paying any taxes, penalties, and interest that are due. You will also have a hard time contacting or finding the ghost tax preparer, who may have vanished or changed their identity or contact details. You will have no recourse or protection from the ghost tax preparer, who is not registered, licensed, or regulated by any authority.
How to find a reputable tax preparer?
To avoid the risks of hiring a ghost tax preparer, you should look for a reputable tax preparer who meets the following criteria:
- Has a valid Preparer Tax Identification Number (PTIN) and signs your return. You can check their PTIN on the IRS website.
- Has a professional credential, such as an Enrolled Agent, Certified Public Accountant, or Attorney. You can verify their credentials on the Federal Tax Return Preparers Directory or the IRS Office of Professional Responsibility.
- Has a good reputation and reviews. You can ask for referrals from your friends, family, or coworkers, or search online for ratings and feedback.
- Has a clear and reasonable fee structure. You should avoid tax preparers who charge based on the size of your refund or who don’t give you a written estimate or receipt.
- Has a secure and confidential way of handling your documents and data. You should avoid tax preparers who ask for your information through email, text, or phone, or who don’t use encryption or password protection.
By following these tips, you can find a reputable tax preparer who can help you file your taxes correctly and safely. Remember, you are ultimately responsible for your own tax return, so you should choose your tax preparer wisely and review your return carefully before signing it. Don’t be shy or too polite to be rushed into hiring a preparer without verifying their credentials.
If you have any questions or need help with your taxes, feel free to contact my office at 202-618-1295 or leave a comment below. I’m an IRS Enrolled Agent and experienced tax professional who can help you with your tax needs.
Frequently Asked Questions
1. Who is a preparer?
A preparer is someone who helps you with your taxes. They can be a professional, such as an Enrolled Agent, a Certified Public Accountant, or an Attorney, or a non-professional, such as a friend, a family member, or a volunteer.
2. Should I hire a tax preparer?
Hiring a tax preparer can be a good idea if you want to save time, money, and stress. A tax preparer can help you with:
- Filing your taxes correctly and on time
- Claiming all the deductions and credits that you qualify for
- Avoiding errors, penalties, and audits
- Planning for your future tax situation
However, hiring a tax preparer also comes with some responsibilities. You need to:
- Choose a reputable and qualified tax preparer
- Provide accurate and complete information to your tax preparer
- Review your tax return carefully before signing it
- Pay your tax preparer a fair and reasonable fee
3. Which tax software is best for tax preparers?
There are many tax software options available for tax preparers, depending on their needs and preferences. Some of the factors to consider when choosing a tax software are:
- Ease of use and functionality
- Cost and features
- Security and reliability
- Customer support and reviews
Some of the popular tax software for tax preparers are:
- Drake Software: This software is designed for professional tax preparers who handle a high volume of returns. It offers fast and accurate calculations, comprehensive forms and schedules, and electronic filing and payment options.
- Intuit ProConnect: This software is ideal for tax preparers who work with small businesses and individuals. It offers cloud-based access, integration with QuickBooks, and collaboration tools.
- TaxAct Professional: This software is suitable for tax preparers who want a simple and affordable solution. It offers easy navigation, customized reports, and unlimited e-filing.
4. What is a preparer in accounting?
A preparer in accounting is someone who prepares financial statements and reports for a business or an organization. A preparer in accounting can be an employee, a contractor, or an outsourced service provider. They can help with:
- Recording and summarizing financial transactions
- Classifying and analyzing financial data
- Reporting and presenting financial information
- Complying with accounting standards and regulations
5. Which tax preparers earn the most?
The pay of tax preparers can vary depending on their experience, education, credentials, location, and employer. According to the Bureau of Labor Statistics, the median annual wage for tax preparers in 2020 was $46,740. However, some tax preparers can earn more than others, depending on their:
- Specialty: Tax preparers who specialize in certain areas, such as international tax, estate tax, or corporate tax, can charge higher fees and attract more clients.
- Credential: Tax preparers who have a professional credential, such as an Enrolled Agent, a Certified Public Accountant, or an Attorney, can demonstrate their expertise and credibility and command higher rates.
- Employer: Tax preparers who work for large and reputable firms, such as the Big Four accounting firms, can earn more than those who work for smaller or less-known firms.
