What should a taxpayer do after using an unqualified ghost preparer?

Question

AcadiFi · Accepted Answer

The taxpayer should first obtain and review the filed return. A ghost preparer may prepare the return but make it appear self-prepared, leaving the taxpayer exposed to errors. The EA should compare the return to the taxpayer's real Forms W-2, 1099, dependents, credits, bank information, and state filings.

Suppose Riverbend Tax Clinic helps a taxpayer who paid $950 to a friend who promised a $7,800 refund. The filed return shows education credits the taxpayer did not qualify for and business expenses with no records. The EA should explain that the taxpayer remains responsible for the return. If the return is wrong, an amended return may be needed. If preparer misconduct occurred, the taxpayer may report the preparer using appropriate IRS channels.

Red flags include a fee based on refund size, refusal to sign the return, depositing refunds into the preparer's account, inventing credits, and discouraging the taxpayer from reviewing the return. EA candidates should remember that taxpayer protection starts with documentation. Get a copy of the return, preserve messages and payment proof, verify the filing status, and correct false items promptly. For exam purposes, identify the taxpayer type, governing rule, required documentation, timing issue, penalty exposure, and next procedural step before choosing an answer. Practice more in our EA question bank.

What should a taxpayer do after using an unqualified ghost preparer?

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