Don't Mess With Taxes

It’s the main tax filing season, so that means it’s also tax scam season.

The Internal Revenue Service has been keeping track of the year’s most prevalent schemes for more than two decades and alerting us in its annual list of the 12 scams it has found to be the most egregious over the last year.

The Dirty Dozen for 2025 includes some repeat [dis]honorees. A few are new or have been tweaked.

But they share one characteristic. They target taxpayers, businesses, and the tax professional community, and all too often end in the loss by victims of personal information, tax data, and money.

So, without further ado, here are the scams, schemes, and con jobs on the latest IRS Dirty Dozen list.

1. Email and text phishing scams: The IRS says it continues to see a barrage of email and text tax scams. These unsolicited fake communications come from entities posing as legitimate organizations in the tax and financial community, including the IRS, state tax agencies, and tax software companies. Whatever the form, they are designed to lure unsuspecting victims into providing valuable personal and financial information that can lead to identity theft.

In the most-common email phishing scam, targets get messages from fraudsters claiming to come from the IRS. The email lures the victims with a carrot, such as a nonexistent tax refund, or a stick, where the taxpayers are threatened them with false legal or criminal charges for tax fraud.

Similarly, smishing con artists send text or smartphone SMS messages that use alarming language such as, "Your account has now been put on hold," or "Unusual Activity Report," with a bogus "Solutions" link to restore the recipient's account. Or they take a more “positive” approach, texting promises of unexpected tax refunds.

Whether the communication is an email or text, never click on any unsolicited message claiming to be from the IRS or other official tax office. Doing so could surreptitiously download malware or ransomware onto your computer or mobile device.

2. Bad social media advice: Social media continues to dominate many of our lives. Tax crooks know this, and in many cases post incorrect tax information that can mislead honest taxpayers, potentially leading to identity theft and tax problems. Some involve urging people to misuse common tax documents like Form W-2.

The IRS and the Coalition Against Scam and Scheme Threats (CASST) warn people not to fall for these scams, and urge them to follow trusted social media advice from the IRS, tax professionals, and other reputable sources.

3. IRS Individual Online Account help from scammers: Swindlers can pose as a "helpful" third party and offer to help create a taxpayer's IRS Individual Online Account at IRS.gov. The IRS encourages taxpayers to create and use this online avenue, which provides convenient access to an individual’s tax information, such as payment history, current balance, copies of select IRS notices, and more.

The information to create and access an online account also is valuable to identity thieves who offer help setting up the account. In reality, they’ll use the taxpayer data to submit false tax returns in a victim's name to get a fraudulent refund.

In reality, you don’t need help to create your IRS account. The IRS page walks you through the account creation/sign-in process.

4. Fake charities: Bogus charities are a perennial problem that can intensify whenever a crisis or natural disaster strikes. Scammers set up these fake organizations to take advantage of the public's generosity. They seek money and personal information, which can be used to further exploit victims through identity theft.

The crooks persuade victims by noting that giving money or goods to a charity might enable the donor to claim a tax deduction on their return if they itemize deductions. But charitable donations only count if they go to a qualified tax-exempt organization recognized by the IRS.

5. False Fuel Tax Credit claims: Some tax scammers are sophisticated enough to tie their schemes to real tax breaks. That’s the case with a ploy that misled taxpayers into believing they were eligible for the Fuel Tax Credit. The credit is real, but is meant for off-highway business and farming use. It is not available to most taxpayers.

However, unscrupulous tax return preparers and promoters, including people on social media, continue enticing taxpayers into inflating their refunds by erroneously claiming the credit. The IRS has seen an increase in the promotion of filing certain refundable credits using Form 4136, Credit for Federal Tax Paid on Fuels. The IRS urges people to get more information and ensure they are properly claiming this credit.

6. Credits for Sick Leave and Family Leave: Another use of a real tax credit to deceive taxpayers is this one designed to help families. New to the Dirty Dozen this year, this specialized credit is available for self-employed individuals for 2020 and 2021 during the pandemic. The credit is not available for later tax years. The IRS is seeing repeated instances where taxpayers are using Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to incorrectly claim a credit based on income earned as an employee and not as a self-employed individual.

7. Bogus self-employment tax credit: The IRS continues to see bad social media advice (see #2) about a non-existent Self-Employment Tax Credit that’s misleading taxpayers into filing false claims. In this scam, also new to the Dirty Dozen, promoters market the tax break as a way for self-employed people and gig workers to get big payments for the COVID-19 pandemic period.

Similar to misleading marketing around the Employee Retention Credit, there is inaccurate information being circulated that suggests many people qualify for the tax credit and payments of up to $32,000 when they actually do not.

In reality, the underlying credit being referred to in social media is not called the Self-Employment Tax Credit. It’s a much more limited and technical credit called the Credits for Sick Leave and Family Leave. Yes, the same tax break used by crooks in #6. Many people simply do not qualify for these credits, and the IRS is closely reviewing claims coming in under this provision, so taxpayers filing claims do so at their own risk.

8. Improper household employment taxes: Yet a third real tax provision is being used against taxpayers. In this case, again debuting on the annual list, taxpayers are convinced to invent fictional household employees and then file a real Schedule H (Form 1040), Household Employment Taxes to claim a refund based on false sick and family medical leave wages they never paid.

9. The overstated withholding scam: This is a recent scheme circulating on social media encouraging people to fill out Form W-2, Wage and Tax Statement, or other earnings documents such as Form 1099-NEC and other 1099s with false income and withholding information.

In this overstated withholding scheme, scam artists suggest people make up large income and withholding amounts as well as the fictional employer supplying those amounts. Scam artists then instruct people to file the bogus tax return electronically in hopes of getting a substantial refund due to the large amount of fraudulent withholding.

If the IRS cannot verify the wages, income or withholding credits entered on the tax return, the tax refund will be held pending further review. Taxpayers should always file a complete and accurate tax return. They should only use legitimate information returns, such as an employer issued Form W-2, to complete returns correctly.

There are multiple variations of the overstated withholding credit scheme, including those involving Forms W-2 and W-2G; Forms 1099-R, 1099-NEC, 1099-DIV, 1099-OID and 1099-B; as well as the Alaskan Dividend Fund, Schedule K-1 with Withholding Reported, and Unspecified Source of Withholding Credit Claimed.

10. Misleading Offers in Compromise: The Offers in Compromise (OIC) program is an important program that helps people settle their federal tax debts when they are unable to pay in full. But OIC mills can aggressively promote this tax debt option in misleading ways to people who clearly don't meet the qualifications, frequently costing taxpayers thousands of dollars. You can check your OIC eligibility yourself, for free, by using the IRS’ online Offer in Compromise Pre-Qualifier tool.

11. Ghost tax return preparers: Most tax preparers provide outstanding and professional service, notes the IRS. However, the agency cautions that people should be careful of shady tax professionals, and watch for warning signs such as charging a fee based on the size of the refund. Another major red flag is when the tax preparer is unwilling to sign the return.

Avoid these ghost preparers, who will prepare a tax return but refuse to sign or include their IRS Preparer Tax Identification Number (PTIN) as required by law. And when it comes to signing a Form 1040, never put your signature, by pen or electronically, on a tax return that is blank or incomplete.

12. New client scams and spear phishing: The 2025 Dirty Dozen wraps up with the new client scam. This scam that targets tax professionals, with cybercriminals impersonating new, potential clients to trick tax preparers and other businesses into responding to the scam emails. Once the target responds, the scammer sends a malicious attachment or URL that can compromise the victim’s computer systems, allowing the attacker to access sensitive client information.

Phishing is a term given to emails or text messages designed to get users to provide personal information, and spear phishing is a phishing attempt tailored to a specific organization or business. Tax professionals frequently find themselves a target of this type of scam, like the just-cited new client scam.

Spear phishing holds greater potential for harm because a successful spear phishing attack can ultimately steal client data and the tax pro’s identity, allowing the thief to file fraudulent returns using the stolen information.

Bonus baker’s dozen tip: While the annual Dirty Dozen highlights some of the most common and costly scams, the IRS also reminds taxpayers that there are a whole lot of other abusive schemes and bogus tax avoidance strategies beyond the Dirty Dozen.

These can involve different types of trusts, offshore schemes, and even individual retirement arrangements. More information on past schemes is available on the IRS’ special Dirty Dozen web page. You also can check out the ol’ blog’s more-recent prior year Dirty Dozen posts:

• Don't fall for any of 2022's Dirty Dozen tax scams
• Dirty Dozen tax scam list for 2023 has old & new schemes
• Fake business tax credits, bogus charities, and phishing and smishing all make the 2024 IRS Dirty Dozen list
• Ghost tax preparers, global tax schemes, and wealthy filers wrap up the 2024 IRS Dirty Dozen

The bottom line in every Dirty Dozen list is to be skeptical of tax promises, especially unsolicited ones, that offer a tax break or refund amount that seems too good to be true. That’s usually an indication that it is fake.

Continued work to stop scams: While tax scams have continued and evolved, so have IRS efforts to stop them and catch the perpetrators.

In addition to the annual scam list, the tax agency has worked with Security Summit members from state tax offices, the financial industry, and the tax community to educate taxpayers about scams and fraudulent schemes.

This year, along with CASST the IRS also implemented filing season changes to detect tax scams and return fraud.

And we need to remember that while tax scams peak during filing season as people prepare their tax returns, all the Dirty Dozen scams (and more) can occur throughout the year. That means that we taxpayer targets need to as determined to not become tax scam victims as the crooks are to con us.

“Scammers are relentless, and they use the guise of tax season to try tricking taxpayers into falling into a variety of traps. These red flags can lead to everything from identity theft to being misled into claiming tax credits for which they’re not entitled,” said Terry Lemons, IRS communications senior adviser and, back in 2002, creator of the Dirty Dozen campaign to counter emerging scams being seen across the country.

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