Beware of Tax Scams: Insights from the IRS's 2025 “Dirty Dozen”

Tax season is upon us, and while it's time to settle our dues with the government, it's also a prime opportunity for scammers to exploit unsuspecting taxpayers. Each year, the Internal Revenue Service (IRS) releases its "Dirty Dozen" list - a compilation of the most prevalent tax scams to watch out for. Being informed about these scams is your first line of defense against fraudsters aiming to steal your personal information and hard-earned money.

1. Phishing and Spear Phishing Attacks

Scammers often send fake emails or text messages, posing as the IRS or other legitimate organizations, to trick you into providing personal information. These messages may contain malicious links or attachments designed to steal your data. Be especially cautious of emails from unknown senders claiming to be new clients or offering unsolicited tax advice.

2. Ghost Tax Return Preparers

"Ghost" preparers charge for tax preparation services but refuse to sign the return or include their Preparer Tax Identification Number (PTIN) as required by law. They may promise large refunds and often direct the refund into their bank account. Always ensure your tax preparer is legitimate and signs your return.

3. Misleading Offers in Compromise "Mills"

The IRS's Offer in Compromise (OIC) program helps eligible taxpayers settle their tax debts for less than the full amount owed. However, some companies mislead taxpayers by promising they can secure an OIC for anyone, often charging hefty fees for services the taxpayer may not qualify for. Use the IRS's free OIC Pre-Qualifier tool to check your eligibility.

4. Fake Charities

Scammers set up fake charities to exploit people's generosity, especially following major disasters. They solicit donations and pocket the money, leaving donors without the promised tax deduction. Always verify a charity's legitimacy through the IRS's Tax-Exempt Organization Search tool before donating.

5. Inflated Refund Claims

Be wary of tax preparers who promise inflated refunds by claiming credits or deductions you're not entitled to. They may ask you to sign a blank return or charge fees based on a percentage of your refund. Such practices can lead to penalties and interest charges. Choose a reputable tax professional and review your return carefully before signing.

6. Falsifying Income to Claim Credits

Some scammers convince taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. This can lead to significant penalties and repayment of the fraudulent refund. Always report accurate income on your tax return.

7. Fictitious Payments and Repayment Demands

Scammers may file a fake tax return on your behalf, claiming a refund, and then contact you demanding repayment, posing as the IRS or a collection agency. The IRS will never demand immediate payment without allowing you to question or appeal the amount owed.

8. Social Media Scams

Fraudsters use social media platforms to lure individuals into tax scams, such as promising tax breaks or refunds related to fictitious programs. They may also use information shared on social media to impersonate friends or family members. Be cautious about sharing personal information online and verify any tax-related offers independently.

9. Senior Fraud

Seniors are often targeted by scammers posing as IRS agents, claiming that the taxpayer owes money or is due a refund. These scams can occur via phone, email, or in person. The IRS will never initiate contact with taxpayers by email, text messages, or social media channels to request personal or financial information.

10. Scams Targeting Non-English Speakers

Scammers may threaten non-English speaking individuals with deportation, arrest, or revocation of their driver's license if they don't pay a bogus tax bill. These threats are often made in the person's native language. Remember, the IRS will never make such threats or demand immediate payment over the phone.

11. Unscrupulous Tax Return Preparers

While most tax professionals provide honest service, some engage in fraudulent activities, such as encouraging you to claim false deductions or credits. Ensure your preparer has a valid PTIN and is willing to sign your return. Be wary of preparers who base their fee on the size of your refund.

12. Tax Debt Resolution Scams

Companies may falsely claim they can settle your tax debt for pennies on the dollar through programs like the IRS's Offer in Compromise. They often charge large upfront fees and fail to deliver on their promises. Consult directly with the IRS or a trusted tax professional to explore legitimate options for resolving tax debts.

Protecting Yourself from Tax Scams

• Be Skeptical: If something sounds too good to be true, it probably is.

• Verify Communications: The IRS typically contacts taxpayers by mail. They will not initiate contact via email, text, or social media.

• Choose Reputable Preparers: Ensure your tax preparer has proper credentials and reviews your return with you before filing.

• Safeguard Personal Information: Always be cautious and look for suspicious requests or unusual behavior before sharing sensitive information over the phone or responding to an email. Warning signs include poorly constructed sentences and unusual word choices.

While the Dirty Dozen list is not a legal document or a formal listing of agency enforcement priorities, it is intended to alert taxpayers and the tax professional community about various scams and schemes.