The District of Columbia Department of Insurance, Securities and Banking (DISB) is warning District residents to be on the alert for ghost tax preparers – scammers pretending to be legitimate tax advisors and tax preparers and then try to steal your identity and money.
Generally, tax season is between January 1 and April 15 for the prior year. Many consumers have used the same tax advisors for years and have confidence in their ability to process tax returns. However, others may be seeking a new income tax preparer – one who offers a low fee to consumers expecting refunds. Some of these companies may be ghost tax preparers that prepare fraudulent tax returns, steal their clients’ personally identifiable information and their refunds, and then disappear once the return is mailed.
Ghost preparers use various means of advertising, including social media, emails, text, and phone calls. They may also advertise in community centers, houses of worship, and on neighborhood bulletin boards.
Ghost preparers don't sign the tax returns they prepare. Instead, they remain invisible, never leaving a footprint. They will print out the return and get the taxpayer to sign and mail it. For e-filed returns, ghost preparers will prepare but refuse to digitally sign the tax return as the paid preparer.
According to the IRS, anyone who is paid to prepare or assists in the preparation of federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a quick dollar by promising a big refund or charging fees based on the size of the taxpayer’s refund.
Ghost tax preparers may also:
- Contact you with unsolicited tax services.
- Have no business address or telephone number, but
- Rather operate only as a virtual business.
- Require payment of their fee in cash only and not provide a receipt.
- Invent income to qualify their clients for tax credits.
- Claim bogus deductions to increase the refund.
- Direct income tax refunds into their own bank account, rather than the taxpayer's account.
If you believe you have been a victim of a ghost preparer, please contact the DISB Enforcement and Consumer Protection Division at (202) 727-8000. Also, free tax clinics are open to all District residents. To view the complete list, visit: disb.dc.gov/freetaxprepresources.