Don’t be scared of ghost preparers and scams

Ghost preparers and tax credit scams are ongoing threats to taxpayers and tax professionals. These schemes often promise large refunds or easy credits but can lead to serious consequences, including audits, penalties and repayment of improper refunds.

What is a ghost preparer?

A ghost preparer is a paid tax return preparer who fails to sign the return or include a valid preparer tax identification number (PTIN). This is a clear violation of IRS requirements and a major red flag. These preparers often submit returns as “self-prepared” to avoid accountability. When errors or fraudulent claims are identified, the taxpayer remains legally responsible for the return. 

Taxpayers should never sign a blank or incomplete return and should always confirm that the preparer signs the return and includes a valid PTIN.

How tax credit scams are evolving

In addition to ghost preparers, the IRS is seeing an increase in tax credit scams. These schemes are often promoted through online sources and may claim that taxpayers qualify for credits they are not eligible to receive or that do not exist, such as the phony “self-employment tax credit.”

Some scams encourage taxpayers to file returns claiming credits with little or no documentation. Others promote “hidden” credits or simplified methods that appear legitimate but are misleading or incorrect. These tactics often target taxpayers seeking larger refunds or faster filing options. In many cases, the claims are exaggerated or entirely false.

Why being alert matters 

Taxpayers are responsible for the accuracy of their returns, even when a preparer is involved. When a return includes false information, the consequences can include:

• Denied or delayed refunds 
• Penalties and interest 
• IRS examinations 

Tax professionals frequently encounter clients who unknowingly relied on ghost preparers or misleading credit claims. Correcting these returns can be time-consuming and may expose the client to additional risk.

Key warning signs

Tax professionals should be alert to common indicators of ghost preparers and tax scams:

• A preparer refuses to sign the return or provide a PTIN. 
• The return is filed as self-prepared when it was not. 
• Refund amounts appear unusually large without clear support.
• Credits are claimed without proper documentation. 
• Clients reference advice from social media or unknown sources.

These signs often indicate that additional review is needed before proceeding.

Best practices for protecting clients

Tax professionals play a critical role in identifying and preventing these issues. Consider the following steps:

• Verify the preparer. Encourage clients to work with credentialed preparers who sign returns and follow IRS requirements.
• Review prior filings. Carefully examine returns prepared by others, especially those with large refunds or unfamiliar credits.
• Ask questions. Confirm the source of credits and deductions and ensure they align with the client’s financial situation.
• Require documentation. Do not rely on unsupported claims. Ensure all positions are backed by credible records.
• Educate clients. Talk with the client about the validity of any credits they may try to claim. Remind clients that they are responsible for their tax return, even if someone else prepares it.

Key takeaway

Ghost preparers and tax credit scams continue to evolve and often rely on misleading promises of large refunds or easy filing.

For tax professionals, the focus should remain on verification, documentation and client education. Identifying red flags early and applying consistent due diligence can help prevent costly errors and protect your clients. Staying informed is one of the most effective ways to reduce risk and maintain trust in your practice.