The IRS 2025 Dirty Dozen: Top Tax Scams to Avoid

Each year, the IRS releases its "Dirty Dozen" list, highlighting the most prevalent tax scams and schemes that pose risks to taxpayers. The 2025 list emphasizes the importance of vigilance, especially during tax season.

1. Phishing and Smishing Scams

Cybercriminals use fake emails (phishing) and text messages (smishing) to trick individuals into providing personal and financial information. These messages often impersonate the IRS or other legitimate entities.

Tip: The IRS will never initiate contact via email or text. Always verify the authenticity of communications.

2. Employee Retention Credit (ERC) Scams

Promoters aggressively push ineligible businesses to claim the ERC, promising substantial refunds. These schemes often involve misleading information about eligibility and application processes.

Tip: Consult with a trusted tax professional before claiming the ERC. The IRS has a special withdrawal program for those who filed in error.

3. Online Account Assistance Scams

Fraudsters offer to help set up IRS online accounts, only to steal personal information. They may use this data for identity theft or unauthorized access to tax records.

Tip: Set up your IRS online account directly through the official IRS website without third-party assistance.

4. False Fuel Tax Credit Claims

The fuel tax credit is intended for off-highway business and farming use. Scammers entice taxpayers to claim this credit improperly, leading to inflated refunds and potential audits.

Tip: Ensure you meet the specific qualifications before claiming the fuel tax credit.

5. Bogus Tax Avoidance Strategies

High-income filers are targeted with schemes involving improper use of trusts, charitable remainder annuity trusts (CRATs), and monetized installment sales to evade taxes

Tip: Be cautious of strategies that seem too good to be true and always seek advice from reputable tax advisors.

6. Abusive Basis Shifting Transactions

Previously, certain partnership transactions that shifted the basis among related parties were flagged as transactions of interest (TOI) by the IRS. However, recent developments have changed this stance.

Update: In Notice 2025-23, the IRS announced its intent to remove the basis shifting TOI regulations. Consequently, penalties for non-disclosure under these regulations are waived, and taxpayers are no longer required to file Forms 8886 or 8918 for these transactions.

7. Improper Use of Charitable Remainder Trusts

Some schemes involve using CRATs to improperly eliminate taxable gains. These abusive arrangements often misrepresent the tax benefits of such trusts.

Tip: Ensure any charitable trust arrangements comply with IRS regulations and are established for genuine philanthropic purposes.

8. Monetized Installment Sales

Promoters advertise monetized installment sales as a way to defer taxes on property sales. These arrangements often lack economic substance and can lead to significant tax liabilities.

Tip: Be wary of complex sale arrangements that promise tax deferral without legitimate business purposes.

9. Fake Charities

Scammers set up fake charities to exploit the generosity of taxpayers. Donations to such entities are not tax-deductible and can lead to personal information theft.

Tip: Verify the legitimacy of charities through the IRS's Tax Exempt Organization Search tool before donating.

10. Unscrupulous Tax Return Preparers

Some tax preparers mislead clients by inflating refunds, charging hidden fees, or stealing personal information.

Tip: Choose tax preparers with valid Preparer Tax Identification Numbers (PTINs) and check their credentials.

11. Offer in Compromise Mills

These mills mislead taxpayers into believing they can settle tax debts for pennies on the dollar, charging hefty fees for services that may not be applicable.

Tip: Consult the IRS's Offer in Compromise Pre-Qualifier tool to assess eligibility before engaging third-party services.

12. Schemes with International Elements

Scams involving offshore accounts, digital assets, and foreign trusts aim to conceal income and evade taxes.

Tip: Ensure full disclosure of international assets and income to remain compliant with IRS regulations.

Stay Informed and Vigilant

The IRS's Dirty Dozen list serves as a reminder to remain cautious and informed about potential tax scams. Always consult with trusted tax professionals and refer to official IRS resources for guidance.