Be warned this tax season: There's a scam that's easy to fall for but it could leave you with a lot of problems.
They're called "ghost tax preparers," and the concept is simple: You trust a person with preparing your taxes, you pay a fee, then that person gets you a big, maybe illegal, refund that they have sent to their own bank account. As long as you signed the tax return, even if it's by electronic signature, the blame is on you. And there are people who sign their return for tax preparers who don't look over the return.
By the time you and the Internal Revenue Service (IRS) realize what's happened, your tax preparer has disappeared. And to make things worse, when you report the scam to the IRS, they might think you're the one trying to pull the scam -- it's your word against that of a tax preparer who can't be found.
"They're going to have you pay the fee for their preparation, then they're going to try to put their information, their bank information with the return so the money comes to them.
"See, the money comes back to them, and you pay a fee, so really the objective is for them to get as much money out of you as possible," says Better Business Bureau Midwest and Pacific Media Manager Cameron Nakashima.
But there's one key to all this: the false promises they use to try to hook you on their tax preparation services.
The BBB warns: this is the first clue they may be unscrupulous.
At first they'll promise you the best service there is -- big refunds that come back fast, but there's a big problem with this -- while that may not be a scam, it's certainly a sham!
"They're going to get you the biggest refund in town, they're going to get it processed the quickest -- but those are two things a tax preparer has no control over!"
"And they'll ask you to sign your tax return, and that's a big no-no. If you're being asked to sign your own tax return when someone else has prepared it, it's a problem.
Signing the return alone without your tax preparer signing it could make the IRS think you prepared your own taxes, which makes it harder to prove that a crime has been committed against you.
"You don't want to be the only one signing your tax return, again, when someone else has prepared it," because that could be part of setting you up for the "ghost preparer" scheme. If the preparer doesn't sign your tax return but has your refund sent to them, there's not much an IRS investigator can look for in the search for the criminal preparer except electronic clues through the bank transaction.