A ghost preparer is someone who doesn’t sign tax returns they prepare. Those unscrupulous preparers often print the return and have the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost will prepare but refuse to digitally sign as the paid preparer. They charge a cash fee and typically have little to no training or experience. Or worse they use their bank information for refunds.
By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on the return.
The Office of Professional regulation wants to know about these people 100% of the time. Legal preparers are encouraged to provide information. But what is your basis for information? Typically, hearsay.
The IRS discovers a discrepancy between a tax return and the information documents it has received, or flags an unusual tax benefit, it will send a notice or start an audit. Who will answer for the fraud.
The IRS can be very good at identifying inconsistencies between what is on a tax return and the information it has from other sources. Not always quickly, but the IRS systems can send a notice automatically, which means the taxpayer’s return could be changed, resulting in additional tax, penalties and interest,