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Don’t Fall Victim to the Most Common Tax Scams by Angie Adames, CPA

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Posted on April 09, 2025 by Angie Adames

Criminals are constantly developing new and more elaborate ways to deceive taxpayers, steal their identities and cheat them out of their hard-earned financial assets. To help protect yourself from becoming a victim of these crimes, the IRS annually publishes a list of the “Dirty Dozen” most common schemes and scams for which you should be on high alert throughout the year.

Email and Text Message Scams

Be alert to fake communications you receive from entities posing as legitimate organizations, including the IRS, state tax agencies, banks and financial institutions, that attempt to lure you into clicking on a link or sharing personal information that can infect your computer with malware and lead to identity theft. Criminals will tempt you to take the bait by promising a tax refund or threatening you with scare tactics that include false threats of legal action or account suspension. Never click on links and attachments contained in unsolicited texts and emails. Call the entity at the number you have on file or open a separate web browser to enter the organization’s website, where you may log in to your account.

Bad Advice on Social Media

Social media is not a reliable source for learning about tax laws and how you may legally reduce your tax liabilities. Much of the tax advice circulated on TikTok, Instagram and Twitter is inaccurate and misleading. Instead, visit the IRS’s website or talk with your trusted accountants and financial advisors to understand what strategies may work best for you in your unique circumstance. After all, filing a fraudulent tax return could expose you to significant civil and criminal penalties.

IRS Individual Online Account Help

The IRS allows taxpayers to create an Individual Online Account, which they may easily set up to access their individual account information, including tax records, tax payments and tax compliance reports, and check on any refunds they are due. However, criminals are posing as authorized third parties to taxpayers set up these accounts. Instead, they steal taxpayers’ personal information and attempt to submit fraudulent tax returns in victims’ names to intercept a bogus tax refund.

Fake Charities

Bogus charities are an all-too-common problem that proliferates after a crisis or natural disaster. Criminals set up these fake organizations to exploit the public’s generosity and ultimately steal taxpayers’ money and identities. Before donating, take a few minutes to confirm the organization’s tax-exempt status by visiting IRS.gov or charitynavigator.org.

False Fuel Tax Credit Claims

Criminals and unscrupulous promoters have long attempted to lure taxpayers into falsely claiming tax credits and deductions for which taxpayers are not eligible. Most recently, taxpayers have been misled into believing they can inflate their tax refunds by erroneously claiming the False Fuel Tax Credit, which is meant for off-highway business and farming use. Check with your tax advisor before making these claims.

Improper Credits for Sick Leave and Family Leave

Another credit the IRS sees taxpayers use erroneously relates to self-employed individuals’ sick and family leave. This specialized credit, available for self-employed individuals during the pandemic for tax years 2020 and 2021, is no longer available. Yet, the IRS sees repeated instances where taxpayers incorrectly use Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to falsely claim a credit based on income earned as an employee, not a self-employed individual.

Bogus Self-Employment Tax Credit

Social media feeds continue to promote a non-existent “self-employment tax credit,” which erroneously claims employees and gig workers may receive a payment for the COVID-19 pandemic period of up to $32,000. In reality, the underlying credit referred to in social media is not called the “Self-Employment Tax Credit;” it is a much more limited and technical credit called the Credits for Sick Leave and Family Leave. Many people 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.

Improper Household Employment Taxes

Taxpayers report fictional household employees and then file IRS Form 1040, Schedule H, Household Employment Taxes, to claim a refund based on false sick and family medical leave wages they never paid.

Overstated Withholding Scams

This scam, promoted heavily on social media, encourages people to file various IRS forms on behalf of a fictional employer to report false and inflated income and withholding information in exchange for a substantial tax refund. Some of the most common filings involved in these schemes include Form W-2, Wage and Tax Statement; W-2G, Gambling Winnings, 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts; 1099-NEC, Nonemployee Compensation; 1099-DIV, Dividends and Distributions; 1099-OID, Original Use Discount; and 1099-B, Proceeds from Broker and Barter Exchange Transactions. If the IRS cannot verify the wages, income or withholding credits entered on the tax return, it will hold the tax refund pending further review.

Misleading Offers in Compromise

The IRS’s Offers in Compromise (OIC) helps taxpayers settle their federal tax debts when they cannot pay in full. However, criminals have leveraged this program, falsely promoting its benefits to taxpayers who do not meet the required qualifications. Ultimately, scammers steal taxpayers’ personal information and swindle them out of thousands of dollars.  You can check your eligibility for an OIC using the IRS Offer in Compromise Pre-Qualifier tool on the IRS website or by contacting your accountant.

Ghost Tax Return Preparers

Be very careful when choosing professionals to prepare and file your tax returns. You are legally responsible for the information contained in those documents, even if another party prepares them for you. Confirm the individual has a valid Preparer Tax Identification Number (PTIN), as required by law, and ensure they sign your return on the dotted line. Do not sign a blank or incomplete tax return prepared by someone else, and be careful to avoid working with anyone who charges fees based on the size of the taxpayer’s refunds.

New Client Scams and Spear Phishing

With the “new client” scam, criminals impersonating potential new business clients send targeted messages to victims and trick them into responding to the bogus inquiry. Once they gain a victim’s trust, scammers send a malicious attachment or URL that can compromise a victim’s computer system and allow attackers to access sensitive client information.

About the Author: Angie Adames, CPA, is a director of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where she provides tax and consulting services to real estate companies, manufacturers and closely held entities. She can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com.