Protect Yourself: IRS Reveals the 2025 ‘Dirty Dozen’ Tax Scams
Each year, the Internal Revenue Service (IRS) publishes its “Dirty Dozen” list, highlighting the most prevalent tax scams targeting taxpayers. For 2025, the IRS urges vigilance against these dangerous threats to safeguard your personal and financial information. Here’s this year’s list.
1. Phishing and Smishing Scams
Cybercriminals continue to employ phishing (email) and smishing (text message) tactics to steal sensitive data. They impersonate the IRS or financial institutions, luring victims into providing personal information or clicking malicious links. Remember, the IRS does not initiate contact via email, text, or social media regarding tax matters.
- Fake Charities
Scammers set up bogus charities to exploit taxpayers’ generosity, especially during times of crisis. Before donating, verify the organization’s legitimacy through the IRS’s Tax Exempt Organization Search tool.
- Social Media Tax Advice
Misinformation about tax laws circulates widely on social media platforms. Relying on unverified advice can lead to incorrect filings and potential penalties. Always consult trusted tax professionals or official IRS resources.
- Spear Phishing for Tax Professionals
Cybercriminals target tax professionals through spear-phishing emails, aiming to access client data. Tax preparers should be cautious with unsolicited communications and employ robust security measures.
- Offer in Compromise Mills
Some firms mislead taxpayers about their eligibility for the IRS’s Offer in Compromise program, charging hefty fees for minimal assistance. Use the IRS’s Offer in Compromise Pre-Qualifier tool to check eligibility before seeking third-party help.
- Abusive Tax Shelters
Promoters push abusive tax shelters, like syndicated conservation easements and micro-captive insurance arrangements, promising significant tax deductions. These schemes often lack economic substance and can lead to substantial penalties.
- Fake Payments with Repayment Demands
Scammers deposit fraudulent refunds into taxpayers’ accounts, then pose as the IRS to reclaim the money, tricking individuals into returning funds to the fraudsters. If you receive an unexpected refund, contact the IRS immediately.
- Payroll and HR Scams
Fraudsters target payroll and human resources professionals to obtain Forms W-2, using the information for identity theft and fraudulent tax filings. Organizations should educate staff and verify unusual data requests.
- Ransomware
Cybercriminals use ransomware to lock victims’ data, demanding payment for release. Maintaining updated security software and regular data backups can mitigate this threat.
10. Ghost Tax Return Preparers
Unethical tax preparers, known as “ghost preparers,” refuse to sign tax returns they prepare, leaving taxpayers responsible for errors. Always ensure your tax preparer signs your return and includes their Preparer Tax Identification Number (PTIN).
- Inflated Refund Claims
Be wary of preparers promising large refunds without knowing your financial situation. They may falsify information on your return, leading to penalties. Choose reputable tax professionals and review your return thoroughly.
- Falsifying Income to Claim Credits
Some individuals falsely inflate income to qualify for tax credits, such as the Earned Income Tax Credit. This illegal practice can result in significant penalties and repayment obligations.
Staying informed about these scams is crucial for protecting yourself during tax season. Always verify the legitimacy of tax-related communications and consult official IRS resources or trusted tax professionals when in doubt.