12 Tax Traps Unveiled: IRS Highlights the Latest “Dirty Dozen” Scams

 

Tax season always carries its own tension. Yet, fraudsters ramp up schemes as soon as filing deadlines loom. Every year, the IRS unveils its “Dirty Dozen”—a list of the twelve most dangerous tax scams targeting taxpayers and tax professionals alike. Recognizing these threats remains vital. Whether you file online or with help, awareness can save money, time and heartache.

1.      Email and Phishing Schemes: Beware the Bait

Bogus emails, texts or social‑media messages impersonate the IRS or tax pros. They demand personal data or payment to “avoid arrest” or “ensure your refund.” A click can unleash malware or siphon sensitive details. Legitimate IRS communications won’t arrive by social media or demand immediate payment via gift cards.

2.      Ghost Preparers: Invisible and Illegal

Some tax preparers offer unbelievably low fees—then disappear once they’ve filed your return. These “ghosts” won’t sign Form 1040 as required. When errors arise or the IRS comes calling, clients face the fallout alone. Always hire a credentialed preparer who affixes a Preparer Tax Identification Number (PTIN).

3.      Inflated Refund Claims: Bigger Isn’t Always Better

Promoters tout “guaranteed” refunds by fabricating deductions, credits or business losses. Unqualified claims for education credits or energy incentives often trigger audits. That misleading tax credits scam tops the Dirty Dozen list once more. Stick to actual expenses and documented credits.

4.      Fake Charities: Scams Dressed as Generosity

Fraudsters set up sham charities after disasters or during peak giving seasons. They solicit donations by phone, email or door‑to‑door appeals. Taxpayers believe they’re helping others and claim false deductions. Always verify nonprofits via IRS’s Tax Exempt Organization Search tool.

5.      Social Media Misinformation: Bad Advice in Your Feed

Tips and videos encouraging shady practices—like under‑reporting income or using false forms—spread rapidly online. That bad social media advice can cost thousands in fines or penalties. When in doubt, consult IRS.gov or a reputable tax professional rather than anonymous posts.

6.      Overstated Withholding Claims: Too Much of a Good Thing

Some scammers promise immediate cash by overstating withholding on W‑4 forms. That tactic reduces take‑home pay but inflates refunds. Then come penalties for underpayment or misrepresentation. Check withholding using the IRS Tax Withholding Estimator for accuracy.

7.      New‑Client Scams: Targeting Tax Pros

Phishers impersonate prospective clients, sending links or attachments laced with malware. Once opened, attackers infiltrate office systems, stealing client files or identities. Tax professionals must verify new clients through secure channels and update cybersecurity routinely.

8.      Fake IRS Calls: The Threatening Ring

Scammers spoof IRS phone numbers, threaten jail time or deportation, and demand payment by prepaid debit cards or wire transfers. The IRS never initiates contact by phone to demand payments. Genuine notices arrive by mail first.

9.      Abusive Tax Shelters: Complex Schemes with High Stakes

Promoters steer wealthy individuals into offshore trusts or loop‑hole laden shelters, touting massive deductions. The IRS labels these abusive arrangements—like abusive syndicated conservation easements—as red flags. Those caught face severe fines and back taxes.

10. Frivolous Arguments: Legal Nonsense

Some taxpayers lean on baseless arguments—claiming, for instance, that wages aren’t income or that the Sixteenth Amendment was never ratified. Courts repeatedly dismiss such claims. Engaging in frivolous strategies invites penalties up to $5,000 per return.

11. Identity Theft: Filing Before You Do

Thieves file fraudulent returns under stolen Social Security numbers to claim refunds. Victims later face delays and must prove legitimate filing. Use IRS’s Identity Protection PIN if eligible, and guard personal data vigilantly.

12. Cryptocurrency Scams: Digital Deceptions

With crypto’s rise, scammers pose as investment gurus offering tax advice on unregulated exchanges. They promise massive deductions or losses to offset gains. Misreporting cryptocurrency transactions can trigger audits or even criminal investigations. Seek guidance from professionals versed in digital assets.

When to Call for Backup?

Complex tax situations—like large charitable contributions, business sales or crypto trades—often warrant expert counsel. Consider reaching out to top tax attorneys in Los Angeles for high‑net‑worth concerns or a reliable tax attorney in San Diego, CA, when local expertise matters.

Staying alert to the Dirty Dozen protects both wallet and peace of mind. By spotting scams early, verifying sources and leaning on qualified professionals, taxpayers can navigate filing season with confidence.