IRS Dirty Dozen: Tax Scams, Abusive Shelters, and Ghost Preparers

Every spring the IRS publishes its “Dirty Dozen,” a list of the twelve tax scams the agency sees most often that year. The 2026 IRS Dirty Dozen tax scams list runs from AI-powered impersonation calls and viral social-media “tax hacks” to longstanding problems like ghost preparers, bogus Employee Retention Credit claims, and abusive shelters marketed to high earners.¹ Many of them peak during filing season, but they run all year, and the consequences fall on the taxpayer, not the person who sold the scheme.

Fake IRS Messages and AI Impersonation

The most common entry point is still a fake message pretending to come from the IRS. Phishing emails copy the agency’s logos and formatting and push you to a counterfeit site that harvests your Social Security number, bank details, or IRS account login. The links may also install malware. Smishing works the same way through text messages, often using shortened URLs to hide where you’re actually going. Typical bait includes lines like “Your account has been put on hold” or “Unusual Activity Report” attached to a fake resolution page.²

The 2026 list adds a newer twist. Scammers use voice-cloning tools to make calls that sound like a real IRS agent, with spoofed caller IDs that display a legitimate-looking government number. AI also lets them generate polished, error-free emails at scale, which erases the spelling mistakes that used to be a giveaway. The reliable defense hasn’t changed: know how the actual IRS gets in touch, which the section below spells out.

Viral Tax Advice on Social Media

Bad tax advice going viral is now a recurring Dirty Dozen entry. Posts on TikTok, Instagram, and other platforms claim “everyone qualifies” for credits like the Fuel Tax Credit or the Sick and Family Leave Credit, urge viewers to file amended returns for credits they were never eligible for, and promise fast refunds with minimal documentation. Since 2022 the IRS has assessed $162 million in penalties over false credit claims tied to social-media misinformation.³

Following that advice can trigger a $5,000 penalty for filing a frivolous return under Internal Revenue Code Section 6702, on top of any other penalties that apply.³ The pattern is predictable. Someone sees a post, files a questionable amended return, gets a refund they shouldn’t have received, spends it, and then gets a bill for the full amount plus penalties and interest. A free video from a stranger is not tax advice, no matter the view count.

Fraudulent Credit and Refund Schemes

Employee Retention Credit Scams

The Employee Retention Credit was pandemic relief for businesses that kept employees on payroll, but aggressive promoters turned it into one of the largest sources of fraudulent claims the IRS has dealt with in years. These firms blast advertising through TV, direct mail, and online ads, charge large upfront fees, and ignore the actual eligibility rules around government shutdown orders or significant declines in gross receipts.⁴

If your business claimed the credit and now suspects it wasn’t eligible, you can withdraw an unprocessed claim or amend the return.⁵ Doing nothing is the worst option, because anyone who improperly claimed the ERC will eventually have to pay it back, plus penalties and interest.

Fuel Tax Credit Fraud

The Fuel Tax Credit is available only for off-highway business and farming use and does not apply to most taxpayers.⁶ That hasn’t stopped promoters and social-media posts from claiming it applies to everyday driving. The IRS has seen a surge of fictitious claims on Form 4136, often backed by fabricated fuel-purchase receipts manufactured by the promoter. These claims get heightened scrutiny.

The Erroneous Refund Penalty

Any fraudulent or inflated refund claim carries its own penalty: 20% of the excessive amount, meaning the portion beyond what you were actually entitled to.⁷ That penalty runs on top of having to repay the refund. Avoiding it requires demonstrating reasonable cause, which is hard when the claim was built on credits you clearly didn’t qualify for.

Abusive Shelters Sold to High Earners

Several Dirty Dozen entries target promoters selling complex arrangements to high-income individuals and business owners. These schemes have real legal scaffolding, which makes them more convincing than a phishing email, but the IRS treats them as abusive shelters and pursues both promoters and participants.

Charitable Remainder Annuity Trusts

In the legitimate version, a charitable remainder annuity trust pays a fixed annuity from donated assets and eventually passes the remainder to charity. In the abusive version, promoters use the trust to sell appreciated property tax-free inside the trust and route the proceeds back to the donor as an annuity while claiming a charitable deduction. Participants risk disqualification of the trust, back taxes on the gain, and substantial penalties.

Micro-Captive Insurance

A micro-captive arrangement involves a small insurance company that your business pays premiums to. Structured properly, the premiums are deductible and the captive can elect favorable tax treatment under Section 831(b). In abusive versions, premiums are inflated far beyond real risk, the “coverage” is implausible, and the real purpose is shifting income into a low-tax entity. The IRS designated certain micro-captive transactions as transactions of interest in Notice 2016-66, which requires participants to disclose them.⁸ Promoters have faced enforcement including penalty settlements.⁹

Monetized Installment Sales

This one targets anyone selling appreciated property who wants cash now but no tax bill this year. A promoter inserts an intermediary that “buys” the property on a long installment note while immediately reselling to the real buyer for cash. The seller then takes a loan sized to match the sale proceeds. On paper, gain is being deferred under the installment sale rules; in practice, the seller has the money. The IRS proposed regulations in 2023 to designate monetized installment sales as listed transactions, which would trigger mandatory disclosure and steep penalties for noncompliance.¹⁰

Syndicated Conservation Easements

Investors buy into a pass-through entity that donates a conservation easement on land it owns. The easement’s appraised value is inflated to produce a charitable deduction worth at least two-and-a-half times the investor’s purchase price, often more. The IRS designated these as listed transactions in Notice 2017-10 and has increased enforcement, focusing on grossly overstated valuations and failure to meet the basic legal requirements for a deductible easement.¹¹

Ghost Preparers and Offer-in-Compromise Mills

Ghost Preparers

Anyone paid to prepare a federal tax return must have a valid Preparer Tax Identification Number (PTIN) and must sign the return.¹² A “ghost preparer” does neither. They prepare the return, collect their fee, and leave the signature line blank or tell you to sign as if you’d done it yourself. The statutory base penalty for failing to sign is $50 per return, adjusted annually for inflation.¹³ That penalty falls on the preparer, but you’re the one left explaining fabricated deductions if the IRS audits.

Offer-in-Compromise Mills

The Offer in Compromise program lets you settle a tax debt for less than the full amount owed, but it’s not available to everyone. The IRS evaluates income, expenses, assets, and ability to pay before accepting any offer.¹⁴ OIC mills run ads promising to settle debts “for pennies on the dollar,” charge large non-refundable fees upfront, and submit applications that have no realistic chance of approval given the applicant’s finances. You end up deeper in trouble: you still owe the IRS, you’ve lost the fees, and interest keeps running. Be skeptical of any firm that guarantees a result before reviewing your tax transcripts, income, and assets in detail.

Verifying a Preparer

The IRS maintains a searchable directory of preparers who hold recognized credentials, including enrolled agents, CPAs, and attorneys. It lists preparers with a current PTIN who have verified credentials or an Annual Filing Season Program Record of Completion.¹⁵ Not every preparer with a PTIN appears there, so it’s a starting point rather than a complete list. For CPAs and attorneys, confirm the credential directly with the state board of accountancy or state bar, since a directory listing could have lapsed since it was last verified.

If cost is the concern, IRS Free File provides free federal tax preparation software for taxpayers with adjusted gross income of $89,000 or less, offered through eight partner companies for the 2026 filing season.¹⁶ A legitimate free option beats a cheap preparer you can’t verify.

The Penalties When It’s Your Return

The promoter may disappear. Your return stays on file. When the IRS catches an improper claim, the bill comes to you.

Accuracy-related penalty: If you underpay because of negligence or disregard of the rules, the IRS adds 20% of the underpayment. This is the baseline for most inflated-credit claims.¹⁷
Civil fraud penalty: If the IRS establishes that any portion of the underpayment was fraudulent, the penalty jumps to 75% of the fraudulent amount. Once any part is proven fraudulent, the entire underpayment is presumed fraudulent unless you prove otherwise by a preponderance of the evidence.¹⁸
Frivolous return penalty: Returns based on positions the IRS considers frivolous, which includes many social-media schemes, carry a flat $5,000 penalty on top of everything else.³
Erroneous refund penalty: A claim for an excessive refund costs 20% of the excess on top of repaying the refund itself.⁷
No statute of limitations on fraud: The IRS normally has three years to audit a return. When a return is false or fraudulent with intent to evade tax, there is no time limit at all.¹⁹

These stack. A taxpayer who claimed a fraudulent $50,000 ERC refund could face the 75% fraud penalty ($37,500), plus interest, plus repayment of the full refund, plus potential criminal referral. “My promoter told me I qualified” is not a defense the IRS accepts.

How the Real IRS Contacts You

Almost every IRS scam depends on you not knowing how the actual agency works. The IRS primarily initiates contact through the U.S. Postal Service.²⁰ Official notices come in an envelope with the IRS name and return address, and they detail the issue, the amount owed if any, and your appeal rights. Before any collection action, you’ll get multiple written notices.

The IRS will never:

Demand immediate payment by gift card, prepaid debit card, cryptocurrency, or wire transfer
Threaten to send police, immigration officers, or other law enforcement to arrest you
Call or email you out of the blue demanding personal information
Send unsolicited texts or social media messages about your tax account

Real payments go through IRS Direct Pay, the Electronic Federal Tax Payment System, or by check payable to the United States Treasury. Any other channel is a scam.

The Three Authorized Private Collectors

One exception to the mail-first rule matters. The IRS is required by law to assign certain older, inactive tax debts to private collection agencies. As of 2026, only three are authorized: CBE Group Inc. (800-910-5837), Coast Professional, Inc. (888-928-0510), and ConServe (844-853-4875).²¹ Before any of them calls, the IRS sends a written notice identifying which agency has your account. If a caller claims to collect for the IRS and isn’t one of those three, or you never got a letter first, hang up.

Protecting Yourself and Reporting Scams

Get an Identity Protection PIN

Anyone with a Social Security number or Individual Taxpayer Identification Number can request an Identity Protection PIN from the IRS. It’s a six-digit number that must appear on your return for it to be accepted, so no one can file a fraudulent return in your name without it. The fastest way to enroll is through the online tool on IRS.gov. If you can’t verify your identity online and your adjusted gross income is below $84,000 ($168,000 for married filing jointly), you can apply by mail using Form 15227. In-person verification at a Taxpayer Assistance Center is also available.²²

If You’re Already a Victim

The clearest sign is trying to e-file and getting a rejection because someone already filed using your Social Security number. If that happens, or if you receive IRS notices about income you didn’t earn, file Form 14039 (Identity Theft Affidavit) online or by mail.²³ If the IRS sends you a Letter 5071C, 4883C, or 5747C, follow the instructions in that letter instead of filing Form 14039.

Where to Report

Phishing emails or text messages: forward them to phishing@irs.gov.²
IRS impersonation phone calls: report to the Treasury Inspector General for Tax Administration at 800-366-4484.²⁴
Preparer fraud: if a preparer filed or altered your return without your knowledge, file Form 14157-A (Tax Return Preparer Fraud or Misconduct Affidavit) with Form 14157 (Complaint: Tax Return Preparer).²⁵
Tax law violations: use Form 3949-A (Information Referral) to report individuals or businesses you suspect of evading taxes, filing false returns, or similar violations.²⁶

Reporting won’t get your money back on its own, but it feeds IRS enforcement and helps shut promoters down before they reach the next round of taxpayers.

1
Internal Revenue Service. Dirty Dozen Tax Scams for 2026
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Internal Revenue Service. Watch Out for Tax Scams and Report Fraudulent Messages
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Internal Revenue Service. IRS Assesses $162 Million in Penalties Over False Tax Credit Claims Tied to Social Media
4
Internal Revenue Service. Learn the Warning Signs of Employee Retention Credit Scams
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Internal Revenue Service. Employee Retention Credit – Voluntary Disclosure Program
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Internal Revenue Service. Dirty Dozen: IRS Warns About False Fuel Tax Credit Claims
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Office of the Law Revision Counsel. 26 U.S. Code 6676 – Erroneous Claim for Refund or Credit
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Internal Revenue Service. Notice 2016-66 – Section 831(b) Micro-Captive Transactions
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Internal Revenue Service. Organizer and Seller of Micro-Captive Insurance Program Agrees to Pay Penalties for Promoting Micro-Captive Insurance Companies
10
Federal Register. Identification of Monetized Installment Sale Transactions as Listed Transactions
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Internal Revenue Service. IRS Increases Enforcement Action on Syndicated Conservation Easements
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Internal Revenue Service. PTIN Requirements for Tax Return Preparers
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Office of the Law Revision Counsel. 26 USC 6695 – Other Assessable Penalties With Respect to the Preparation of Tax Returns for Other Persons
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Office of the Law Revision Counsel. 26 USC 7122 – Compromises
15
Internal Revenue Service. Directory of Federal Tax Return Preparers with Credentials and Select Qualifications
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Internal Revenue Service. 2026 Tax Filing Season Opens With Several Free Filing Options Available
17
Office of the Law Revision Counsel. 26 U.S. Code 6662 – Imposition of Accuracy-Related Penalty on Underpayments
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Office of the Law Revision Counsel. 26 U.S. Code 6663 – Imposition of Fraud Penalty
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Office of the Law Revision Counsel. 26 U.S. Code 6501 – Limitations on Assessment and Collection
20
Internal Revenue Service. Internal Revenue Manual 1.22.5 – Mail Operations
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Internal Revenue Service. Private Debt Collection
22
Internal Revenue Service. Get an Identity Protection PIN
23
Internal Revenue Service. When to File an Identity Theft Affidavit
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Internal Revenue Service. Report Fake IRS, Treasury or Tax-Related Emails and Messages
25
Internal Revenue Service. Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit
26
Internal Revenue Service. Information Referral (Form 3949-A)