The IRS Dirty Dozen: 12 Tax Scams Every Business Owner Should Know About in 2026
Nope, it’s not some clickbait title of a popular blog..
Every year the IRS releases a list of “dirty dozen” tax scams that are relevant to the new tax year.
Every year, the Internal Revenue Service publishes a list known as the “Dirty Dozen.” This list highlights the most common tax scams affecting taxpayers, business owners, and tax professionals across the United States. While many people assume tax scams only target wealthy individuals or large corporations, the reality is quite different. In many cases, small businesses, freelancers, and solopreneurs are the primary targets.
Entrepreneurs are often busy running their businesses and may not have time to stay up to date with evolving tax fraud schemes. Scammers understand this. They design convincing messages, fake tax advice, and fraudulent services that appear legitimate on the surface. Some schemes promise large tax refunds, others claim to reduce tax debts, and some simply attempt to steal personal information.
Unfortunately, participating in these scams—knowingly or unknowingly—can result in IRS penalties, audits, identity theft, and significant financial losses.
Understanding the IRS Dirty Dozen is one of the simplest ways to protect yourself and your business. This article explains each of the 12 scams in plain language, along with practical steps you can take to avoid becoming a victim.
Why the IRS Publishes the “Dirty Dozen”
The Dirty Dozen list is not an official ranking of crimes or a comprehensive list of every tax fraud scheme. Instead, it serves as a public awareness campaign designed to help taxpayers recognize and avoid common threats.
Tax scams evolve quickly. Social media, artificial intelligence tools, and increasingly sophisticated cybercriminal tactics make it easier for scammers to reach thousands of people at once. Many schemes rely on misinformation or confusion about tax rules, particularly among self-employed individuals and small business owners.
The IRS uses the Dirty Dozen list to educate taxpayers about:
• identity theft schemes
• fraudulent refund claims
• misleading tax advice
• dishonest tax preparers
• deceptive tax debt settlement companies
By staying informed about these scams, you can reduce your risk of becoming a victim and ensure your tax filings remain compliant.
1. Phishing and Smishing Scams
One of the most common tax scams involves phishing emails and smishing text messages. These messages appear to come from the IRS or another official government agency.
They typically claim that:
• you are owed a refund
• there is a problem with your tax return
• your account needs verification
• you must take immediate action to avoid penalties
The messages often contain links to fake websites that look nearly identical to official IRS pages. Once you enter your personal information—such as your Social Security number or bank account details—criminals can use that information to commit identity theft.
In some cases, clicking the link can also install malicious software on your device, allowing scammers to monitor activity or access sensitive data.
The IRS has repeatedly emphasized an important rule: the IRS does not initiate contact with taxpayers via email, text messages, or social media.
If you receive an unexpected message claiming to be from the IRS, it is almost certainly fraudulent.
2. Misleading Tax Advice on Social Media
Social media platforms such as TikTok, Instagram, and YouTube have become a major source of financial information. Unfortunately, they have also become a breeding ground for dangerous tax misinformation.
Many viral posts encourage taxpayers to claim deductions or credits they are not eligible for. Some creators promote strategies that involve falsifying information on tax forms to generate larger refunds.
These posts often present themselves as “secret IRS loopholes” or “tax hacks.” In reality, they may involve filing inaccurate or fraudulent tax returns.
For example, some social media videos encourage people to manipulate withholding amounts on tax forms to create artificially large refunds. Others suggest claiming business deductions for personal expenses that do not qualify under tax law.
Even if someone else suggested the strategy online, the taxpayer remains legally responsible for the accuracy of their tax return. Following bad advice on social media can result in penalties, interest charges, and audits.
3. IRS Online Account Scams
The IRS offers an online account system that allows taxpayers to review their tax records and manage certain aspects of their filings.
Scammers have begun exploiting this service by offering to “help” individuals create their IRS accounts. They may claim that setting up the account will unlock special refunds, tax credits, or stimulus payments.
In reality, their goal is to collect the personal information required to create the account, including:
• Social Security numbers
• addresses
• birth dates
• financial account information
Once scammers gain access to this data, they can use it to commit identity theft or file fraudulent tax returns.
If you want to create an IRS online account, always do so directly through the official IRS website.
4. Fake Charities
Fake charities are another common scam, especially during times of crisis such as natural disasters or humanitarian emergencies.
Fraudsters create organizations that appear legitimate and ask for donations to support victims or relief efforts. In many cases, they use emotional messaging to pressure people into donating quickly.
While legitimate charities do important work, fake charities simply collect donations and disappear, often stealing personal information along the way.
Before donating to any organization, it is wise to verify that it is a registered nonprofit. The IRS provides tools that allow taxpayers to confirm whether a charity is eligible to receive tax-deductible contributions.
5. False Fuel Tax Credit Claims
The Fuel Tax Credit is a legitimate tax credit designed for businesses that use fuel for certain off-highway activities. Examples include farming, construction, and other specialized operations.
However, scammers have begun promoting the credit as a way for ordinary taxpayers to receive large refunds.
Many promoters encourage people to claim the credit even when they do not qualify. In some cases, taxpayers are told they can claim the credit simply because they drive for work or commute long distances.
This is incorrect. Most individuals are not eligible for the Fuel Tax Credit.
Taxpayers who improperly claim the credit may face penalties and be required to repay the refund.
6. Improper Sick Leave and Family Leave Credits
During the COVID-19 pandemic, Congress created temporary tax credits for certain self-employed individuals who were unable to work due to illness or family caregiving responsibilities.
Although these credits were designed to provide relief during a specific period, scammers continue to promote them as if they are still widely available.
Promoters often charge large fees to prepare fraudulent claims for these credits. They may claim that anyone who was self-employed during the pandemic automatically qualifies.
In reality, eligibility for these credits is limited and depends on specific circumstances.
Taxpayers who claim credits they do not qualify for may be required to repay the amount and could face additional penalties.
7. Bogus Self-Employment Tax Credits
Another growing scam involves a so-called “self-employment tax credit.” Promoters claim that freelancers, gig workers, and small business owners can receive large refunds by claiming this credit.
The problem is simple: this credit does not exist.
Fraudsters often use confusing language or refer to unrelated tax provisions to make the scheme sound legitimate. They may charge preparation fees or request a percentage of the refund.
In many cases, they submit fraudulent tax returns on behalf of taxpayers.
The IRS has warned that individuals who participate in these schemes may be held responsible for repaying the funds and could face civil or criminal penalties.
8. Fake Household Employee Schemes
Some scams involve falsely reporting household employees in order to claim refundable tax credits.
In these schemes, a taxpayer may be instructed to create fake wage records for a household worker such as a nanny, housekeeper, or caregiver. The wages are then used to claim tax credits that would normally apply to legitimate employment situations.
Because refundable credits can generate refunds even when no taxes are owed, scammers attempt to exploit these provisions.
However, submitting false employment information on a tax return is considered fraud.
The IRS actively investigates these cases and may impose significant penalties.
9. Overstated Withholding
Another fraudulent tactic involves inflating the amount of tax withholding reported on tax forms.
Some scammers instruct taxpayers to alter information on forms such as W-2 or 1099 documents to make it appear as though more taxes were withheld than actually were.
This creates the illusion that the taxpayer is entitled to a large refund.
However, the IRS receives copies of these forms directly from employers and financial institutions. Any discrepancies are likely to be detected.
Taxpayers who submit altered documents may face audits, penalties, and possible criminal charges.
10. Offer in Compromise Mills
The IRS offers a legitimate program called an Offer in Compromise, which allows certain taxpayers to settle their tax debts for less than the full amount owed.
Unfortunately, some companies exploit this program by advertising unrealistic promises. They claim they can eliminate tax debt for “pennies on the dollar,” regardless of the taxpayer’s financial situation.
These businesses often charge large upfront fees while providing little or no actual service.
In many cases, taxpayers who hire these firms discover that they do not qualify for the program at all.
Before hiring any company that claims to reduce tax debt, it is important to verify their credentials and understand the actual requirements of the IRS program.
11. Ghost Tax Preparers
A ghost tax preparer is someone who prepares tax returns but refuses to sign them as the paid preparer.
Legitimate tax preparers are required to include their Preparer Tax Identification Number (PTIN) on returns they prepare. This ensures accountability and transparency.
Ghost preparers avoid signing returns so they cannot be easily traced if problems arise.
They may promise unusually large refunds or claim they can access secret deductions unavailable to other preparers.
Once the return is filed, the taxpayer becomes responsible for any errors or fraudulent claims.
Working with a reputable, credentialed tax professional is one of the best ways to avoid this risk.
12. Spear-Phishing Attacks on Tax Professionals
Tax professionals themselves are increasingly targeted by cybercriminals.
In spear-phishing attacks, scammers impersonate potential clients and send emails containing malicious attachments or links.
If the tax professional opens the file, it may install malware that allows criminals to access sensitive client data.
Because accounting firms store large amounts of personal and financial information, they are attractive targets for cybercrime.
Many firms now implement stronger security measures, including multi-factor authentication and secure document portals, to protect client information.
How Small Business Owners Can Protect Themselves
While the Dirty Dozen scams may seem alarming, the good news is that most tax fraud schemes follow predictable patterns.
Scammers typically rely on urgency, confusion, or promises of easy money. By slowing down and verifying information before taking action, you can avoid many of these traps.
Here are a few practical habits that can dramatically reduce your risk.
First, always verify the source of any tax-related communication. If someone claims to represent the IRS, independently confirm their identity rather than responding directly to the message.
Second, avoid relying on tax advice from social media influencers or unverified sources. Tax law is complex, and misleading advice can have serious consequences.
Third, work with qualified professionals when you need help. Reputable bookkeepers, accountants, and tax preparers follow strict ethical and regulatory standards.
Finally, protect your personal information. Use strong passwords, enable multi-factor authentication when possible, and be cautious about sharing sensitive data online.
Read the full IRS publication here: https://www.irs.gov/newsroom/dirty-dozen-tax-scams-for-2026-irs-reminds-taxpayers-to-watch-out-for-dangerous-threats
The Importance of Working With Trusted Professionals
Many tax scams succeed because people are looking for help. Small business owners often face complicated tax rules and may feel overwhelmed during tax season.
Working with experienced professionals can provide both accuracy and peace of mind.
A qualified bookkeeper or tax professional can help you:
• maintain accurate financial records
• understand which deductions and credits legitimately apply to your business
• prepare compliant tax filings
• avoid costly mistakes
Most importantly, they can help you distinguish between legitimate tax strategies and fraudulent schemes.
Final Thoughts
Tax scams are becoming more sophisticated every year. Criminals use convincing websites, professional-looking emails, and viral social media content to make their schemes appear legitimate.
The IRS Dirty Dozen list serves as a reminder that staying informed is one of the best forms of protection.
By understanding the most common scams, verifying information before taking action, and working with trusted professionals, taxpayers can significantly reduce their risk.
If you are a small business owner, freelancer, or entrepreneur, taking a proactive approach to financial management is essential. Accurate bookkeeping, responsible tax planning, and professional guidance can help ensure that your business remains compliant and protected.
