A “ghost preparer” prepares a tax return for a fee but refuses to sign it as the paid preparer and refuses to include a Preparer Tax Identification Number (PTIN), which the IRS requires for paid return preparers. Ghost preparers commonly print the return and tell the taxpayer to sign and mail it, or they prepare an e-filed return but do not sign the return as the paid preparer or include their PTIN. That omission violates federal paid-preparer requirements and can trigger IRS preparer penalties for failing to sign a return and for failing to furnish an identifying number such as a PTIN. It often signals a fraud pattern because the preparer tries to avoid accountability while inflating refunds, inventing income to trigger credits, claiming fake deductions, or diverting refunds into accounts the taxpayer does not control. The taxpayer then faces the immediate fallout. The government treats the return as the taxpayer’s sworn filing, and the taxpayer must explain any entries created by a hidden preparer. This dynamic increases audit exposure, creates credibility problems in examinations, and can elevate a case into a criminal tax investigation when the facts suggest willfulness or fabrication.
Ghost preparer cases also create a second, quieter hazard: signature mechanics. Taxpayers often sign without reviewing, sign incomplete submissions, or authorize an electronic signature without understanding what the preparer transmitted. The IRS explicitly warns taxpayers to avoid ghost preparers, to review the return carefully before signing, and to never sign a blank or incomplete return. When you sign a federal return, you sign under penalties of perjury. If the return contains material falsehoods and the government proves willfulness, the signature can become a key exhibit in a criminal tax prosecution narrative.
The Signature Footprint Matters Because the Law Treats the Return as Yours
Federal law requires most returns and many related tax documents to include a written declaration that the submission is made under penalties of perjury. That rule underpins why ghost preparer behavior creates risk for the client. You may not draft the return, but your signature provides the government with a sworn statement that you believe the return is true and correct. If the IRS later proves that you willfully signed a return you did not believe to be true and correct as to every material matter, it can pursue felony charges under Internal Revenue Code Section 7206(1). In ghost preparer cases, prosecutors often focus on what you knew, what you reviewed, what records you provided, and whether the false items looked obvious enough that you could not reasonably miss them.
Paid preparers have their own legal duties, and ghost preparers deliberately violate them. The IRS states that paid preparers must sign returns and include their PTIN. The IRS also maintains a penalty framework for preparers who fail to sign returns, fail to include identifying numbers such as PTINs, or understate a taxpayer’s liability due to unreasonable positions or willful or reckless conduct. Ghost preparers often skip the paid preparer signature line precisely because they want to evade that accountability trail, especially when they charge fees based on refund size, demand cash-only payment, or route refunds into accounts they control.
Electronic filing adds another layer that ghost preparers exploit. In many professional e-file situations, taxpayers sign Form 8879, which authorizes the taxpayer’s electronic signature (PIN) for an e-filed Form 1040 series return filed by an electronic return originator (ERO). The ERO must retain the signed Form 8879 for three years, and you should insist on a complete copy of what the preparer transmitted, not just a summary. Ghost preparers may attempt to avoid even that paperwork by presenting the filing as “self-prepared,” leaving the taxpayer with a return that lacks the ordinary preparer’s signature footprint auditors expect.
California adds separate compliance expectations. California law requires many non-exempt preparers who prepare returns for a fee to register with the California Tax Education Council (CTEC). Federal law requires a PTIN for any person who prepares a federal tax return for compensation, and California’s CTEC registration rules also require a valid PTIN for CTEC-registered tax preparers. When preparer fraud occurs, the Franchise Tax Board (FTB) can investigate preparer fraud and related tax crimes through its Criminal Investigation Bureau. A ghost preparer who contaminates both the federal and California returns can therefore trigger parallel exposure.
How Ghost Preparers Convert Signature Problems Into Audit and Criminal Tax Exposure
Ghost preparers rarely “miss” signatures by accident. They usually omit signatures because they want to remain invisible while they push questionable reporting positions that generate refunds. The IRS identifies ghost preparers as a red flag, warns that a refusal to sign can signal fraud, and describes common ghost-preparer behaviors, including inventing income to qualify for credits, claiming fake deductions, charging fees based on the refund amount, and directing refunds into the preparer’s own account. These facts matter because they align with the core elements the government uses to evaluate intent. A pattern of fabricated Schedule C activity, inflated credits, or manipulated withholding can create the appearance of deliberate false reporting. The government will then test whether you acted willfully, acted with reckless disregard, or consciously avoided learning the truth.
Certain signature and “footprint” problems predict heightened scrutiny in practice. They do not prove guilt, but they frequently create audit friction and investigative interest because they deprive the government of a responsible preparer identity, and they correlate with refund-driven fraud patterns the IRS has publicly flagged. In California state, the risk increases further when the preparer also violates registration expectations, because the FTB can treat that as part of a broader fraud story and develop the case in parallel with federal activity.
Red flags that often accompany ghost preparer and signature-risk scenarios include the following, and you should treat them as an immediate signal to stop and reassess:
- The preparer refuses to sign the return or refuses to include a PTIN.
- The preparer prints the return and instructs you to sign and mail it, or e-files it but refuses to sign as the paid preparer.
- The preparer bases fees on a percentage of the refund, promises unusually large refunds, or refuses to provide you a complete copy of the return.
- The preparer directs refunds into an account you do not control.
- The preparer discourages review, asks you to sign an incomplete return, or minimizes your questions about entries you do not understand.
If a return contains material falsehoods, the signature can expose both sides. Taxpayers can face criminal tax exposure under Section 7206(1) when the government proves willfulness. Preparers can face felony exposure for willfully aiding or assisting in the preparation or presentation of a materially false return under Section 7206(2). Ghost preparer behavior often appears in real prosecutions because it helps a preparer conceal their role and increases the chance that the taxpayer cannot credibly explain how the false return was filed.
What to Do If You Used a Ghost Preparer or You See Signature Irregularities
Do not let the same preparer “handle the audit” if you suspect ghost preparer behavior or fraudulent entries. That preparer has a direct incentive to minimize their role, and you can lose control of your intent narrative if the preparer communicates with agents without a coordinated defense strategy. You should immediately preserve your records exactly as they exist, obtain full copies of every filed federal and California return and all schedules, and request IRS account transcripts to confirm what the IRS received. You should also document how the preparer communicated, what the preparer asked you to sign, what the preparer represented about refunds, and where the preparer directed deposits.
You should also treat reporting decisions as high-risk strategic steps when you face potential criminal tax exposure. The IRS provides a process for complaints about preparer misconduct through Form 14157, and it uses Form 14157-A when you allege a preparer filed or altered a return without your knowledge or consent and you seek changes to your tax account. Form 14157-A requires a signature under penalties of perjury, which means it can function as evidence and must align with the facts you can support. California also provides reporting channels, and the FTB publishes guidance on reporting fraudulent preparers, including referrals to CTEC where applicable and FTB enforcement contacts for nonregistered or questionable preparer practices. A disciplined defense plan controls what you report, when you report it, and how you support it, especially when you may need to correct filings.
You should also address confidentiality immediately. Communications with a non-attorney preparer generally do not provide the protections you need when a case carries criminal tax investigation risk. You should centralize communications through counsel so you can manage document production, avoid accidental admissions, and decide whether corrective filings make sense based on the timing and the government’s posture. In high-risk matters, you should treat the case as parallel civil and criminal tax exposure from day one and plan every step with the assumption that investigators may later review the paper trail. When you engage our attorneys for civil and criminal tax defense, our CPAs work under attorney supervision as employees of the Tax Law Offices of David W. Klasing as part of the legal team, and we structure the engagement to maximize attorney-client privilege and work-product protections to the fullest extent the law allows.
Contact the Tax Law Offices of David W. Klasing if You Suspect a Ghost Preparer Touched Your Return
Contact the Tax Law Offices of David W. Klasing if a preparer refused to sign your return, refused to include a PTIN, asked you to sign and mail a return they prepared, or e-filed a return without signing as the paid preparer. The IRS publicly identifies these behaviors as red flags associated with ghost preparers and refund-driven fraud, and you should treat them as a serious compliance issue, not a minor paperwork defect. Early intervention lets you control the facts and strategy before an audit hardens into a criminal tax investigation trajectory.
If the return includes Schedule C activity you do not recognize, credits you do not understand, or refund routing that does not point to an account you control, it would be wise to reach out to our dual-licensed Attorneys and CPAs immediately. The government often evaluates willfulness through what the taxpayer signed, what the taxpayer reviewed, and how the taxpayer responded once the problem surfaced. We can stabilize communications, organize the documentary record, and develop a defensible narrative that separates your conduct from a preparer’s misconduct without creating new evidentiary problems.
Contact the Tax Law Offices of David W. Klasing if you want a coordinated federal and California civil and criminal tax defense strategy that treats every signature, every submission, and every explanation as evidence-in-the-making. We can defend audits, manage parallel exposure, and handle preparer-misconduct reporting decisions with the level of precision these matters demand. We focus on preventing escalation, limiting criminal tax exposure, and positioning you for the safest resolution that the facts will support. Call us at 800-681-1295 or use our online contact form to request a confidential reduced-rate initial consultation HERE.
