The Dirty Dozen - 2025 Edition
Tax Scams to Avoid
While not as entertaining as the 1967 WWII film starring Lee Marvin, the annual release of the IRS Dirty Dozen tax scams has been issued and is worth a quick review.
ID THEFT
The first four items on the Dirty Dozen deal with scammers who use subtlety and fear to confuse potential victims into handing over personal information and money. These scams are targeted at all taxpayers but especially the elderly. Please ensure that the older people in your life are aware of these scams.
1) Email Phishing Scams: The IRS continues to see a barrage of email and text scams targeting taxpayers. You should be alert to fake communications from entities posing as legitimate organizations in the tax and financial community like the IRS, state tax agencies and tax software companies. These messages arrive in the form of unsolicited texts or emails to lure unsuspecting victims into providing valuable personal and financial information that can lead to identity theft. There are two main types:
Phishing: An email sent by fraudsters claiming to come from the IRS. The email lures the victims into the scam with a variety of ruses such as enticing victims with a phony tax refund or threatening them with false legal or criminal charges for tax fraud.
Smishing: A text or smartphone SMS message where scammers often 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. The promise of unexpected tax refunds is another potential tactic used by scam artists.
As a reminder, never click on any unsolicited communication claiming to be from the IRS as it may surreptitiously load malware. This may also be a way for malicious hackers to load ransomware that keeps the legitimate user from accessing their system and files.
2) Ghost Tax Return Preparers: Most tax preparers provide outstanding and professional service. However, as no Federal license is required for tax preparers, people should be careful of shady tax professionals. You should watch for these common warning signs:
charging a fee based on the size of the refund.
the tax preparer is unwilling to sign the return.
the tax preparer not including their IRS Preparer Tax Identification Number (PTIN).
request to sign a blank or incomplete return.
3) New Client Scams and Spear Phishing: This scam is targeted at tax professionals. Cybercriminals impersonate new, potential clients to trick tax professionals into responding to their emails. Once the tax professional responds, the scammer sends a malicious attachment or URL that can compromise the preparer's computer systems and allow the attacker to access sensitive client information. We recently received a suspicious email from a 401(k) TPA who had his email account hacked and immediately deleted the email. This is the primary reason that we request documents to be uploaded to us via our secure portals.
4) IRS Online Account Help from Scammers: The IRS is finally getting online and that means that you need to set up a secure account to access the new system. Swindlers are posing as a "helpful" third party and offer to help create a taxpayer's IRS Individual Online Account at IRS.gov. In reality, the process is really easy and no help is needed. If a third party making these offers does steal a taxpayer's personal information, they will submit fraudulent tax returns in the victim's name to get a big refund.
BAD ADVICE
The next four items on the list cover “tax advice” being promoted and spread throughout social media. Since the tax code is over 75,000 pages and constantly changing, any advice you hear at a dinner party or see on Tik Tok should be taken with a grain of salt (and run by a tax professional). In all of these scams, the IRS may mistakenly pay out an initial refund but the paperwork will eventually catch up and the scam will be exposed and reversed.
5) Bad Social Media Advice. A growing concern in 2025 continues to involve incorrect tax information on social media that can mislead honest taxpayers with bad advice, potentially leading to identity theft and tax problems. Social media platforms routinely circulate inaccurate or misleading tax information including filing fraudulent Form 7202, Sch H and Form 8944. The IRS reminds taxpayers who knowingly file fraudulent tax returns that they could potentially face significant civil and criminal penalties.
6) Fake Charities. Bogus charities are a perennial problem that can intensify whenever a crisis or natural disaster strikes. Scammers set up these fake organization 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.
Taxpayers who give money or goods to a charity might be able to claim a deduction on their federal tax return if they itemize deductions, but charitable donations only count if they go to a qualified tax-exempt organization recognized by the IRS. You can check the IRS Tax Exempt Organization list before giving to any charity.
7) False Fuel Tax Credit Claims. A major concern during the past year involved taxpayers who were misled into believing they were eligible for the Fuel Tax Credit. The credit is meant for off-highway business and farming use and is not available to most taxpayers. However, unscrupulous 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 will be increasing review of this credit in 2025 to ensure all claims are legitimate.
8) Credits for Sick Leave and Family Leave. 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 to incorrectly claim a credit based on income earned as an employee and not as a self-employed individual.
9) Bogus Self-Employment Tax Credit: Social media advice continues to circulate about a non-existent “Self-Employment Tax Credit that’s misleading taxpayers into filing false claims. Promoters marketed it 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. 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.
10) Improper Household Employment Taxes: Taxpayers “invent” fictional household employees and then file Schedule H, Household Employment Taxes, to claim a refund based on false sick and family medical leave wages they never paid.
11) 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 forms like Form 1099-NEC and other 1099s with false income and withholding information. The scam suggests 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.
12) 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 "mills" can aggressively promote Offers in Compromise in misleading ways to people who clearly don't meet the qualifications, frequently costing taxpayers thousands of dollars. A taxpayer can check their eligibility for free using the IRS Offer in Compromise Pre-Qualifier Tool.