We don't get many — OK, not any — kids dressed as ghosts on Halloween night. Our neighborhood's youngsters seem to prefer dressing as comic book icons turned movie characters.
Heck, last week I even saw an adult, or a very tall teen, dressed as Spiderman, full-face mask included, during my last grocery store visit. But that's for another blog post. Or a call to the local authorities.
Getting back to ghosts, notably those with tax connections.
As I mentioned in an earlier post, ghost employees and ghost employers can wreak havoc when it comes to employment taxes.
Ghost tax preparers also create problems, particularly for individual taxpayers.
Scary tax preparers: Some tax preparers refuse to sign clients' tax returns. Or they ask people to sign a blank return. They also often refuse to include their tax law required Preparer Tax Identification Number (PTIN) on clients' returns.
Unflattering adjectives are used to describe these folks: Shady. Questionable. Unprofessional. Dishonest.
The Internal Revenue Service has a special moniker for them: ghost preparers.
"Most tax professionals offer excellent advice and can really help people navigate complex tax issues. But we continue to see instances where taxpayers are 'ghosted' by unscrupulous tax preparers with bad advice who quickly disappear," said IRS Commissioner Danny Werfel earlier this year in announcing that ghost tax preparers again made the agency's annual Dirty Dozen tax scams list.
Ghost preparers made the latest list, just like they also did in prior years, because their filing actions — or rather, inactions —put taxpayers, the tax professional community, and the U.S. Treasury at risk of losing personal information, data, money, and more.
Most of us who don't live in major disaster areas just passed the Oct. 16 filing extension deadline. And we're still a few months away from the 2024 tax-filing season.
But since Halloween is almost here, it's a good time for a reminder about decidedly spooky ghost tax preparers.
Ghostly get-arounds: By law, anyone who is paid to prepare or assist in preparing federal tax returns must have a valid PTIN for the current tax season.
Paid preparers also must sign the return and include their PTIN.
Ghost preparers, however, do not sign the return. Instead, they print out the Form 1040 and tell the taxpayer to sign and mail it to the IRS.
When it comes to e-filed returns, these spooky preparers do fill out the forms electronically, but refuse to digitally sign the documents as the paid preparer.
Scaring up ill-gotten cash: One thing ghost preparers share with other unscrupulous tax professionals and scammers is that these tax filing ghouls are not looking out for their taxpaying clients.
Rather, they're looking to make a fast buck by promising a big refund or charging fees based on a percentage of the refund.
And the tricks they use could metaphorically make your head spin like young Regan MacNeil's in in the classic 1973 film The Exorcist.
Some of the ways ghost tax return preparers go about getting taxpayer money include:
- Requiring payment in cash only and not providing a receipt.
- Asking taxpayers to sign a blank or incomplete tax return.
- Inventing income to erroneously qualify clients for tax credits.
- Claiming fake deductions to boost refunds, and the preparer's payment percentage.
- Directing refunds into any bank accounts other than the taxpayer's account.
If your preparer does or suggests any of these actions, take the advice of one of the best modern scary movies and Get Out!
Don't let a tax pro mistake haunt you: When the 2024 tax filing season arrives, millions will file as soon as they can. This happens every year because these individuals are expecting tax refunds.
But don't be in such a hurry to file for your tax cash that you use an ill-prepared or worse a crooked tax preparer. You, the taxpayer, are ultimately responsible for anything on your Form 1040 so wrong information entered by a paid preparer will come back to haunt you.
Check out any tax professional you're considering hiring carefully. You have lots of options. Review them all to find a tax preparer who understands and meets your personal tax needs, as well as passes some basic vetting tests.
The IRS also has a special online page about picking a tax pro. There you'll find added info on tax preparer credentials and qualifications and a directory you can use to find qualified and ethical tax help.
Once you've found a credible tax pro, during the filing process make sure you review your tax return carefully before signing. Ask questions if something is not clear.
Never sign a tax return that's not completely filled out. And make sure your tax pro also signs, either with a pen-to-paper real John Hancock, or, in most cases nowadays, electronically using the IRS-required identification preparer protocol.
As for your refund, especially if it's going to be directly deposited, double check both the routing and bank account numbers on the completed tax return to ensure they go to your, not the preparer's or some other, account.
Busting bad tax preparers: Who you gonna call if you've hired a ghost preparer or other type of bad tax help? The IRS.
OK, the IRS would rather you not call, but contact the agency by mail. But I couldn't resist, and c'mon, admit it. That great original (can you believe it's been 39 years!?) Ghostbusters theme song began playing in your head the minute you read the movie title.
As for ghostly and other terrible tax preparers, the IRS has official forms you can file to report unscrupulous paid tax assistance. Such complaints are doubly important when you suspect a tax preparer of filing or changing your return without your consent.
I know that these worries are still a few months off. But they definitely are scary enough to warrant an early warning this Halloween season.
One more spooky item: Check out my tumblr blog Tumbling Taxes' Halloween post, which includes a clip from one of my favorite television shows, CBS' version of the UK show "Ghosts."
You also might find these Halloween and tax pro items of interest:
- 5 Halloween tax break treats
- 4 ways the IRS is scary, on Halloween and year-round
- High school senior's essay offers a valuable tax lesson for preparers
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