HERE COMES THE IRS—AGAIN: THE IRS DIRTY DOZEN FOR 2025

For many years I have written on the topic of shams and frauds committed against members of the public and professionals, such as attorneys, accountants, et al.

For many years the IRS has issued its list of what it considers as the most abhorrent tax scams that it has found for the given year in question.

As mentioned, I have written about these IRS lists of the “Dirty Dozen” schemes and many others.  I wrote about these types of schemes in the CPA Journal in 2013 and in many other publications, such as the Real Estate Review in 2015.  We also have covered the topic in Chapter 40 of Real Estate Transactions, Tax Planning, a text published by Thomson/Reuters/West on an annual basis. Yet, these scams and fraudulent actions occur each year.  Some of the actions are new; others are mere modifications of schemes that were undertaken in prior years, and they have been adjusted to take advantage of taxpayers and professionals in other settings that have been modified because of more recent legislation that amends existing tax laws.

The Dozen such schemes noted by the IRS this year, in IR 2025-26, released in Feb of 2025, cover the following 12 areas:

1.    “Phishing. Among the top threats this year are email phishing and smishing, where criminals send fraudulent messages impersonating the IRS or other financial entities to trick recipients into revealing their sensitive information. The IRS reminds taxpayers not to click any links from anyone claiming to be from the agency as it may contain malware.

2.    Bad social media advice. Misleading tax advice on social media has been encouraging individuals to file fraudulent claims using Form W-2 or improperly claim credits they do not qualify for. Taxpayers must only follow trusted social media advice from the IRS and other reputable sources to prevent facing significant penalties if they file fraudulent tax returns.

3.    IRS Individual Online Account help scam. Scammers trick taxpayers into sharing personal information by offering fake assistance in creating an IRS Individual Online Account. However, taxpayers do not need help to set up this account and should only follow official IRS guidance.

4.    Fake charities. Fake charities are a recurring problem every year, especially during disasters. Fraudsters often exploit disasters by creating fake charities to steal donations and personal data. These scams do not just involve money, but they also pose identity theft risks. Taxpayers should always verify a charity's legitimacy before donating.

5.    False Fuel Tax Credit claims. The IRS reports that taxpayers have been misled into improperly claiming the Fuel Tax Credit during the past year. However, the credit is not available to most taxpayers because it was designed for off-highway business and farming use.

6.    Sick Leave and Family Leave credits. Many taxpayers have been using Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to incorrectly claim a credit even though it is only available for self-employed individuals for 2020 and 2021.

7.    Fake self-employment tax credit. A non-existent "Self-Employment Tax Credit" has been falsely claiming online that self-employed people and gig workers can receive payments of up to $32,000 for the COVID-19 period. This misleading information refers to the expired Sick Leave and Family Leave credits. The IRS warns that most taxpayers are not qualified for these credits and it is closely monitoring these claims.

8.    Improper household employment taxes. The IRS also reports a rise in fraudulent filings involving Schedule H, in which taxpayers create fictional household employees to claim a refund based on wages they never paid.

9.    Overstated withholding scam. The overstated withholding scam operates when scammers submit tax returns with exaggerated income and withholding amounts to receive large refunds. The IRS warns that such claims will be closely scrutinized, and refunds will be withheld if discrepancies are determined.

10. Misleading OIC. The Offer in Compromise program allows eligible taxpayers to settle tax debts for less than the full amount owed. However, aggressive promoters mislead ineligible taxpayers into applying, often charging thousands in fees. The IRS advises taxpayers to use its OIC Pre-Qualifier tool to verify eligibility.

11. Ghost tax return preparers. "Ghost" preparers are those who will prepare returns but refuse to sign them or include their IRS Preparer Tax Identification Number (PTIN). This is a huge red flag. Taxpayers should avoid preparers who charge a fee based on the refund amount or ask them to sign blank or incomplete returns.

12. Spear phishing scams. Tax professionals are also targeted through spear phishing scams. Criminals often use malware to infiltrate systems by posing as potential clients to gain access to sensitive tax information.”

As a review of the above dozen items discloses, many of these frauds involve areas that have existed for many years.  For example, the Phishing approach often involves the wrong doer impersonating an IRS officer to try to obtain key information from the taxpayer.  Malware may also be involved.

Other schemes are not limited to tax issues, but all of them have some potential for tax fraud.  Claiming refunds or credits that are not owed or that are owed to someone else is another common ploy.

As we have written in other articles, professionals should be on guard for scams that are committed against tax return preparers, attorneys, and other professionals.  No one is free from this potential threat.

The IRS has encouraged those aware of such frauds to report the same to the IRS under its report Form 14242 – Report Suspected Abusive Tax Promotions or Preparers,.

By

Dr. Mark Lee Levine, Professor, University of Denver