In this guide

  1. Refusal to sign the return
  2. Refund-percentage fees
  3. Deposits routed to the preparer
  4. Inflated refund promises
  5. No PTIN on the return
  6. No engagement letter
  7. No IRS-recognized credential
  8. Pressure to file before review
  9. Phantom deductions and dependents
  10. Unreachable after filing

Refusal to sign the return

The single biggest red flag is a preparer who prepares the return but refuses to sign it as the paid preparer. The IRS calls these “ghost preparers” and warns about them every filing season. Federal law requires the paid preparer to sign and enter their PTIN; a refusal is both unlawful and a near-certain indicator of fraud.

Refund-percentage fees

Treasury Department Circular 230 prohibits a paid preparer from charging a fee that is contingent on the size of the refund. A preparer who quotes a fee as a percentage of the refund (or who offers a “bigger refund or your money back” guarantee) is operating outside the rules and creating a direct financial incentive to inflate the refund.

Deposits routed to the preparer

Refunds should be deposited directly into the taxpayer’s bank account, not the preparer’s. A preparer who insists on routing the refund through their own account — even temporarily — is creating an opportunity to skim a portion. Refund-anticipation loans and refund-anticipation checks are legitimate products, but the underlying refund should still flow into the taxpayer’s name.

Inflated refund promises

A preparer who promises a refund of a specific size before reviewing your documents is making a promise they cannot keep. Refunds depend on the underlying facts of the return. Preparers who guarantee large refunds before seeing the W-2s are typically planning to inflate the refund through phantom dependents, fabricated Schedule C losses, or fake credits.

Recommended: a deeper background read on tax-professional credentialing →

No PTIN on the return

Every paid preparer must enter their PTIN on every return they prepare. Before signing your return, look at the “Paid Preparer Use Only” section at the bottom of Form 1040. The preparer’s name, signature, PTIN, firm name, and firm EIN should all appear. A blank section is a sign of a ghost preparer.

No engagement letter

Reputable preparers use an engagement letter that specifies the scope of work, the fee structure, the timeline, and the post-filing support terms. A preparer who refuses to put the engagement in writing is asking you to take their word for everything — including the fee. Walk away.

No IRS-recognized credential

Roughly half of all paid preparers in the United States hold no IRS-recognized credential. They are legally entitled to prepare returns — the PTIN is the only mandatory federal requirement — but they have no third-party verification of their training. For complex returns, prefer an EA, CPA, AFSP filer, or attorney over an unenrolled preparer.

Pressure to file before review

You have the right to review your completed return before signing. A preparer who pressures you to sign immediately, or who refuses to walk you through the return line by line, is rushing you past the moment when errors and inflated items would normally be caught. Take the time to review.

Phantom deductions and dependents

If your refund is substantially larger than you expected, ask why — specifically. The preparer should be able to point to a specific deduction, credit, or income item. Vague answers (“I found you some extra deductions”) often mean the preparer fabricated entries. Common fabrications include phantom dependents, inflated charitable contributions, fictitious Schedule C losses, and made-up education credits.

Unreachable after filing

Returns sometimes attract IRS notices. A preparer who is unreachable after April 15 — whose phone goes to voicemail, whose office is shuttered, whose website disappears — is a preparer you cannot rely on for representation. Confirm post-filing availability in writing before engaging, and prefer preparers who maintain year-round practice.

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