Be Wary of Ghost Tax Preparers This Halloween

The Arizona Department of Revenue cautions taxpayers to be aware and don’t get haunted by past “ghost” prepared returns this Halloween season or any time of the year.

A ghost preparer is someone who is paid to prepare a tax return, but does not sign it or include other necessary information to identify themselves. ADOR warns taxpayers that if a preparer won't state their name on the tax return, it could be a possible scam.

By not providing the required information, it will appear that the return was self-prepared, which benefits the ghost tax preparer by staying under the radar. A ghost preparer may promise a larger refund and charge fees based on a percentage of the refund, which is prohibited. It is also a red flag potentially indicating a frightening array of problems.

The preparer may ask the client to pay them in cash or not provide a receipt for services. They may file the return without your consent or alter the return after providing a completed copy. Often, they will use incorrect information to generate a larger refund, claiming false dependents, false expenses, deductions, credits, etc. Even worse, the ghost preparer may divert your funds into their bank account and then disappear.

By law, anyone who prepares or assists in preparing federal and state tax returns for compensation must have a valid 2021 Preparer Tax Identification Number (PTIN). Paid tax preparers are required to sign and include their PTIN on the paper tax returns they prepare. For electronically filed returns, the preparer must list their name and PTIN and sign electronically.

The Department of Revenue advises taxpayers that it is important to ask questions and carefully review their tax returns. Ultimately, the taxpayer is responsible for what is filed, regardless of who prepared the return.

Tips for taxpayers:

• Verify that the preparer has signed the return and include their PTIN before you sign it.
• Check if the preparer is available year-round to explain how the return was prepared in the event of an examination.
• Confirm any additional costs for service prior to preparation.
• Ask any questions before signing and filing. Ask the preparer to explain deductions, credits, and wages claimed.
• Ensure the tax preparer provides you with a copy of the entire return, including schedules, if there are itemized deductions or credits.
• Carefully review the tax return before submitting, ensure numbers are correct, and schedules add up to source documents.

ADOR recommends taxpayers with concerns about their tax preparer should report it to the department’s “Report Tax Fraud Hotline” at https://azdor.gov/contact-us/report-tax-fraud.

*The ADOR Fraud Hotline previously maintained phone number, (602) 542-4023, is no longer in service.

Thursday, October 28, 2021