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How to avoid ‘ghost preparers' and other tax scams as the April 15 federal filing deadline approaches

How to avoid ‘ghost preparers’ and other tax scams as the April 15 federal filing deadline approaches
Karl Tapales | Moment | Getty Images
  •  Last year, the IRS received 294,138 complaints of reported identity theft, the second most in its history — and the agency's criminal investigation agents identified more than $5.5 billion in tax fraud. 
  •  If you receive an email, text or call from an unknown company offering to assess your potential tax savings or get you a bigger refund, be wary.
  • The IRS says it will "never initiate contact with taxpayers by email, text, or social media regarding a bill or tax refund." 

As the April 15 federal tax deadline draws near, most taxpayers have less than two weeks to submit their 2023 individual tax return or file an extension — but for scammers, that's still ample time to try to steal filers' personal and financial information. 

Last year, the IRS received 294,138 complaints of reported identity theft, the second most in its history. The agency's criminal investigation agents identified more than $5.5 billion in tax fraud

As of its March 22 report, the IRS has processed 79.2 million federal returns — almost half of the 167 million individual tax returns it expects to be filed this season, according to IRS spokesman Eric Smith. 

Taxpayers who have yet to submit their return or tax payment need to take precautions, fraud experts say. 

"File electronically or go directly into the post office to mail out your tax returns or a tax payment," said Jennifer Hessing, fraud analytics director at Wells Fargo. "External mailboxes can be targets for theft as scammers look to steal personal information or checks being sent out for tax payments."

Here are three common tax scams and ways to avoid them: 

Beware of unsolicited emails, texts, phone calls

If you receive an email, text, or call from an unknown person or company offering to assess your potential tax savings or get you a bigger refund, be wary.

The pitch could go like this: "We would love to get that [refund] to you as easily and as quickly as possible. All you need to do is provide us with some information, and we'll make that happen," said Steve Earls, head of consumer data security at IDShield. "If you're like, 'I don't trust you, do you have a phone number I could call?' They even have fake call centers. It's all the same kind of conglomerate."  

Calls, emails or text messages from scammers posing as legitimate tax or financial organizations may also ask you for valuable personal and financial information that can lead to identity theft. 

Third-party offers to set up your IRS account

Other schemes may help you set up an online account at IRS.gov to fill out and process your return more quickly. You may be asked for your Social Security number or Individual Taxpayer Identification Number and a photo ID to set up the online account.

Then the fraudster can sell that information or use it themselves to file fraudulent tax returns, open credit card accounts or get loans.  

'Ghost tax preparers'

A "ghost tax preparer" may prepare your return but fail to sign the document or provide their address or tax ID number. They may assume you'll sign a return without verifying this information and have then already captured your personal and financial information. 

One of the easiest ways to spot a scam is when a taxpayer hires someone to prepare a return and information on the paid preparer section of the return is missing or says "self-prepared," said Los Angeles-based certified public accountant Miklos Ringbauer.

"That should be the very first and utmost red flag for a client when they are looking at the return to review," he said. "A taxpayer should never file a return and just sign without reviewing their returns."

Tips to avoid tax scams

  • The IRS will usually contact you through regular mail, not by phone. The agency says it will "never initiate contact with taxpayers by email, text, or social media regarding a bill or tax refund." 
  • Only use the approved authentication process available on IRS.gov. 

Reporting tax scams

If you believe you are a victim of a tax scam, immediately report it to government officials. 

  • The IRS advises reporting all unsolicited emails claiming to be from the IRS or an IRS-related entity to phishing@irs.gov
  • If you're a victim of identity theft, the Federal Trade Commission offers a step-by-step guide on what to do at identifytheft.gov.

CNBC's Stephanie Dhue contributed reporting.

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