The Internal Revenue Service is warning taxpayers to watch out for unethical tax return preparers, or ''ghost" preparers.

Under federal law, anyone who is paid to prepare or assist in preparing federal tax returns must have a valid Preparer Tax Identification Number or PTIN. Paid preparers are supposed to sign the return and include their PTIN.

But shady ''ghost" preparers print the return and tell taxpayers to sign it. Or for e-filed returns, they prepare the return but refuse to digitally sign it as the paid preparer. The IRS warns that these scam artists often will promise a big refund and may even charge fees based on a percentage of the refund.

The IRS says the ghost preparers may also:

  • Require payment in cash only and not provide a receipt.
  • Invent income to erroneously qualify their clients for tax credits or claim fake deductions to boost their refunds.
  • Direct refunds into their own bank account rather than the taxpayer’s account.

The IRS warns taxpayers to carefully go over their return before signing it and to ask questions about anything that is unclear.