“Ghost preparers” tied to $179 million in potentially fraudulent refunds

Thousands of tax returns seeking nearly $180 million in refunds over two years were prepared by ghost preparers tied to a fraudulent withholding scheme, according to a report from the Treasury Inspector General for Tax Administration (TIGTA).

Ghost preparers, included in the IRS 2026 Dirty Dozen list of tax schemes, are paid tax return preparers who fail to sign returns or provide a valid preparer tax identification number (PTIN). 

TIGTA identified 47 potential ghost preparers linked to 6,352 tax year 2023 returns requesting more than $94 million in refunds and 65 potential ghost preparers linked to 6,444 tax year 2024 returns requesting more than $85 million in refunds.

The findings, released Friday, come as lawmakers consider the Taxpayer Assistance and Service (TAS) Act, which the AICPA has endorsed. The legislation would expand IRS oversight of paid tax return preparers, an issue that has been debated since a federal appeals court ruled in 2014 that the agency lacked authority to regulate return preparers.

The Senate unanimously approved the TAS Act, which awaits consideration in the House.

The returns flagged by TIGTA exhibited characteristics of an overstated withholding scheme that the IRS has identified as a tax scam, the report said.

“Ghost preparers may encourage taxpayers to claim tax credits and benefits for which they do not qualify and, in some cases, steal their refunds,” TIGTA said.

In the report, TIGTA noted that a February 2026 U.S. Government Accountability Office report recommended that Congress improve federal oversight of paid preparers and grant the IRS authority to establish professional standards for the industry.

IRS data shows that over half of all individual taxpayers used a paid preparer during fiscal year 2024, TIGTA said. “Return preparers are critical to tax administration and provide a unique opportunity to impact taxpayer behavior and compliance with tax laws,” the report said. “It is imperative that the IRS effectively regulate return preparers.”

The findings related to ghost preparers were part of a broader TIGTA review of return preparer compliance. The report found that 2,044 preparers were potentially involved in the overstated withholding scheme across tax years 2023 and 2024, preparing 78,530 returns that sought more than $740 million in refunds. TIGTA said 84% of those preparers were uncredentialed.

TIGTA also found that over 38,000 preparers with noncompliant PTINs prepared more than 2.2 million returns during processing year 2025. Nearly 12,000 of those preparers completed about 95,000 individual returns claiming nearly $600 million in refunds. TIGTA said those preparers presented a higher risk because they prepared only returns requesting refunds but noted that a PTIN’s status does not make a return invalid or fraudulent.

TIGTA recommended that the IRS finalize and implement its new data-driven return preparer strategy that the Tax Professional Management Office said the IRS began drafting as of June 2026. The IRS agreed with the recommendation.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.