IRS Issues Warning About Online Scams Encouraging False Credits, Deductions, and Withholdings on 2025 Tax Returns
Posted in Offshore Account Update on March 17, 2025 | Share
The Internal Revenue Service (IRS) is warning U.S. taxpayers to be cautious about falling for online scams that encourage false credits, deductions, and withholdings during the 2025 tax season. These scams are becoming increasingly common—especially on social media—and, as the IRS makes clear, falling victim to a scam is not an excuse for paying less than you owe. Learn more from Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.
The Non-Existent “Self-Employment Tax Credit”
In its annual “Dirty Dozen” list of scams targeting U.S. taxpayers, the IRS warns of social media scams promoting a non-existing “Self-Employment Tax Credit” for gig workers and other independent contractors. As the IRS explains, the scams appear to rely on false representations about two different credits—the pandemic-era Employee Retention Credit (ERC) and the Credits for Sick Leave and Family Leave—neither of which are available to self-employed individuals under most circumstances.
Combating ERC fraud has been a top IRS enforcement priority since the pandemic, and, as the IRS explains, it is “closely reviewing claims coming in under [the Credits for Sick Leave and Family Leave], so taxpayers filing claims do so at their own risk.”
Overstated Income Tax Withholdings
The IRS is also warning U.S. taxpayers to avoid falling for a scam circulating on social media that encourages submitting false income and withholding information on 2025 tax returns. As the IRS explains:
“In this overstated withholding scheme, scam artists suggest people make up large income and withholding amounts as well as the fictional employer supplying those amounts. Scam artists then instruct people to file the bogus tax return electronically in hopes of getting a substantial refund due to the large amount of fraudulent withholding.”
Every aspect of this is illegal—and submitting false income and withholding information to the IRS presents not only a high risk of triggering an IRS audit but also a high risk of facing criminal tax fraud charges. As the IRS makes clear, “[i]f [it] cannot verify the wages, income or withholding credits entered on [a] tax return, the tax refund will be held pending further review.”
Other Credit, Deduction and Withholding Scams
Along with scams promoting the non-existing “Self-Employment Tax Credit” and encouraging overstated income tax withholdings, the IRS’ “Dirty Dozen” list warns of several other credit, deduction, and withholding scams as well. These include (but are not limited to):
- False Fuel Tax Credit claims for on-road vehicle use
- Contributions to fake charities that aren’t recognized by the IRS
- False Credits for Sick Leave and Family Leave
- Claiming refunds for wages paid to non-existing employees
As a U.S. taxpayer, it is up to you to ensure that you comply with the Internal Revenue Code. Taxpayers who underreport or underpay their federal income tax liability—even unintentionally—can face steep civil or criminal penalties. If you have concerns about facing scrutiny from the IRS, you should consult with an experienced Washington D.C. tax lawyer as soon as possible.
Request a Confidential Consultation with Washington D.C. Tax Lawyer Kevin E. Thorn
To request a confidential consultation with Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, contact us today. Call 202-349-4033 or contact us confidentially online to schedule an appointment as soon as possible.
