We all want to save money on taxes—but there’s a line between smart tax strategy and risky behavior that can land you in serious trouble. Every year, the IRS releases a list of the most common tax scams they’re watching closely: the “Dirty Dozen.”

At Polaris Tax & Accounting, we help clients across Plantation, Tamarac, and South Florida stay compliant, prepared, and audit-proof. Here’s what you need to know about the IRS Dirty Dozen and how to avoid becoming a target.

Why the Dirty Dozen Matters

The IRS uses the Dirty Dozen list to spotlight aggressive, abusive, or outright fraudulent tactics used by individuals and shady preparers. Falling into any of these categories can trigger:

  • Penalties of up to 75% of unpaid taxes
  • IRS audits and account freezes
  • Criminal investigations
  • Years of financial damage

Let’s walk through the most common red flags to avoid.

1. Inflating Deductions and Credits

Overstating charitable donations, padding business expenses, or claiming tax credits you don’t qualify for (like the Child Tax Credit or EITC) is a fast track to an IRS notice.

Stay compliant: Work with a professional who reviews your receipts and documentation thoroughly. And keep clean records.

2. Falsifying Income to Maximize Credits

Some taxpayers (or preparers) invent income to qualify for refundable credits. This may seem like a way to boost a refund, but it’s fraud—and the IRS is actively targeting it.

Tip: Your income should match supporting forms like 1099s, W-2s, or client invoices. If it doesn’t, it raises a red flag.

3. Frivolous Tax Arguments

These include absurd claims like: “Only federal employees owe taxes,” or “I can refuse to pay for religious reasons.” These arguments don’t hold up—and they often come with a $5,000 penalty.

Bottom line: If a scheme sounds clever but no CPA will sign off on it, it’s not clever—it’s criminal.

4. Tax Return Preparer Fraud

Not all preparers are created equal. Some overpromise refunds or fudge numbers to make you happy—and leave you holding the bag when the IRS comes calling.

Pro Tip: Always review your return before signing. And never let a preparer deposit your refund into their account.

🔗 See what makes Polaris different when it comes to IRS representation »

5. Improper Claims for Business Credits and Expenses

The Fuel Tax Credit and Research Credit are often misused. Most businesses don’t qualify unless they meet very specific criteria. Filing for these without proper documentation is a huge audit trigger.

But it doesn’t stop there—improperly claiming or inflating everyday business expenses can be just as risky. The IRS is increasingly looking for well-documented and consistently categorized books.

Good bookkeeping isn’t optional. It’s your first line of defense when the IRS wants proof. Organized records, clean profit-and-loss statements, and receipts to support your deductions are critical.

📌 See how good bookkeeping protects your return »

6. Offshore Account Evasion

Failing to report offshore accounts or foreign income can trigger massive penalties—and even criminal charges. The IRS has stepped up international enforcement.

Tip: If you hold funds abroad, disclose it correctly through FBAR and FATCA filings.

7. Fake Charitable Donations

Scammers create fake charities to collect donations—and some taxpayers unknowingly (or knowingly) claim deductions for these gifts.

Do this instead: Use the IRS’s Tax-Exempt Organization Search before donating. And save your donation receipts.

8. Identity Theft & Phishing

Fraudsters use fake emails, phone calls, or refund promises to steal your personal information and file bogus returns.

Reminder: The IRS will never call, text, or email asking for personal info or payment methods. Report phishing attempts immediately.

9. Inflated Refund Promises

If someone says they can get you the “biggest refund possible,” be cautious. These promises often rely on falsified returns, inflated income, or fake credits—and when the IRS catches it, you’re responsible.

10. Phone Scams

Scammers impersonate IRS agents and threaten jail time, arrest, or legal action unless you send money. These calls are fake, but they catch thousands of people every year.

11. Phony Tax Document Schemes

Some scammers create fake 1099s or use forged bonds and promissory notes to offset debt. These scams are not just risky—they’re illegal.

12. Abusive Tax Shelters

Complicated tax structures that sound too good to be true? They usually are. These often involve offshore accounts, fake insurance arrangements, or shell corporations. The IRS is cracking down on abusive strategies masked as advanced planning.

If it’s complex, get a second opinion. We regularly help clients unwind high-risk setups created by aggressive firms or promoters.

How to Protect Yourself and Your Business

  • Stay organized. Clean books and accurate records are your first line of defense.
  • Vet your tax pro. Ask if they sign the return and explain their process.
  • Avoid shortcuts. If it sounds too good to be true, get a second opinion.
  • Use projections. Avoid surprises by knowing what you owe before year-end.

📘 Explore our Tax Projection Services

Honest Planning Wins

Tax planning isn’t about hiding—it’s about strategy, documentation, and structure. At Polaris, we take compliance seriously because we know the cost of getting it wrong.

If you’re unsure whether your current return could raise red flags, let’s take a look together.

📅 Schedule a confidential consultation

We’ll review your return, identify risks, and build a plan that gives you confidence going forward—no shortcuts, no stress, no surprises.