The IRS recently released its annual “Dirty Dozen” list, warning taxpayers, businesses, and tax professionals about common tax scams and fraudulent schemes that pose a risk to financial security. These scams, which range from phishing attempts to misleading tax credit claims, tend to surge during tax season but can happen year-round. Awareness is key to protecting yourself from fraudsters aiming to steal your identity, money, or personal information.
The following is a breakdown of each scam and our expert commentary on best practices to avoid falling for them.
1. Email Phishing and Smishing Scams
Scammers use phishing (fraudulent emails) and smishing (fake text messages) to impersonate the IRS, tax agencies, or financial institutions. These messages often:
- Promise an unexpected tax refund
- Threaten legal action due to unpaid taxes
- Contain malicious links designed to steal personal information
How to Stay Safe: Never click on suspicious links. The IRS does not contact taxpayers via email or text for sensitive tax issues.
2. Bad Tax Advice on Social Media
Social media is rife with incorrect tax advice, often encouraging users to submit fraudulent claims. Misleading content may suggest:
- Falsely inflating income or withholding for bigger refunds
- Using incorrect forms to claim credits that do not apply
- Misreporting employment status to reduce tax liability
How to Stay Safe: Verify tax information from trusted sources like the IRS website or a professional tax advisor.
3. IRS Individual Online Account Scams
Criminals pose as helpful third parties offering to set up IRS online accounts for taxpayers. Instead, they steal sensitive data and file fraudulent tax returns in the victim’s name.
How to Stay Safe: Set up your IRS online account personally at IRS.gov and never share login credentials with third parties. It is important that their are useful online accounts for managing personal and business taxes. Check out our article on benefits of leveraging the MyFTB tool.
4. Fake Charities
Fraudsters create bogus charities, particularly after natural disasters or crises, to solicit donations and personal information.
How to Stay Safe: Verify organizations through the IRS Tax-Exempt Organization Search tool before donating.
5. False Fuel Tax Credit Claims
The Fuel Tax Credit is intended for off-highway business or farming use, but scammers trick taxpayers into falsely claiming it.
How to Stay Safe: Confirm eligibility before filing claims and beware of tax preparers pushing questionable credits. We recently published our guidance on IRS mileage rates for 2025.
6. Misuse of Sick and Family Leave Credits
Some taxpayers are misled into improperly claiming pandemic-era sick and family leave credits for tax years where they no longer apply.
How to Stay Safe: Understand which credits remain available and avoid outdated tax filing strategies.
7. Bogus Self-Employment Tax Credit
There is no “Self-Employment Tax Credit,” despite misleading social media claims. Scammers promise tax refunds of up to $32,000 by misrepresenting eligibility for COVID-19-related credits.
How to Stay Safe: Consult a tax professional before claiming any lesser-known credits.
8. Fraudulent Household Employment Tax Claims
Some scammers fabricate household employees on tax returns and file Schedule H to claim fake refunds based on sick or family leave wages they never paid.
How to Stay Safe: Report only legitimate household employees and wages to the IRS.
9. Overstated Withholding Scams
Fraudsters encourage taxpayers to submit false withholding information on W-2s and 1099s to generate large refunds.
How to Stay Safe: Ensure all withholding information accurately reflects earnings and deductions.
10. Misleading Offer in Compromise (OIC) Schemes
Offer in Compromise (OIC) programs allow taxpayers to settle debts when they cannot pay in full. However, dishonest companies falsely guarantee OIC approval to collect fees from taxpayers who do not qualify.
How to Stay Safe: Use the IRS OIC Pre-Qualifier tool at IRS.gov before working with any third-party company.
11. Ghost Tax Return Preparers
Unethical tax preparers, known as “ghost preparers,” refuse to sign returns, often promising big refunds but leaving taxpayers responsible for fraudulent filings.
How to Stay Safe: Work with credentialed tax professionals who provide their Preparer Tax Identification Number (PTIN) and sign all prepared returns.
12. New Client Spear Phishing Scams
Cybercriminals target tax professionals by posing as new clients, sending malware-laced emails designed to steal sensitive tax data.
How to Stay Safe: Be cautious when receiving unsolicited emails from potential clients, especially those with attachments or links.
Final Thoughts: Stay Vigilant Year-Round
While these scams tend to peak during tax season, fraudsters operate year-round. Always:
- Protect your personal and financial information
- Verify the credentials of any tax professional or service
- Report suspicious activity to the IRS or FTC.gov
At Aura Advisors, we prioritize defensible, innovative, and secure tax strategies. If you have concerns about tax fraud or need guidance on compliance, contact our team of experts to ensure your filings remain accurate and risk-free. Proper planning today can save significant heartache—and expense—down the road. To get started, connect with the Aura Advisors team.
Aura Advisors is a boutique tax consulting and compliance firm working with start-ups, emerging growth companies, and affluent individuals. Making it safer for good people and good companies to continue to do good things.