The IRS publishes its annual “Dirty Dozen” list specifically to warn taxpayers about the schemes that are doing the most damage each year. For small business owners, the stakes are especially high. A single scam can result in thousands of dollars in losses, IRS penalties, or a drawn-out audit process that drains time you don’t have. Here’s a breakdown of the most critical scams from the 2026 Dirty Dozen list and what your business can do to stay protected.
Employee Retention Credit (ERC) Fraud
The Employee Retention Credit is still one of the most heavily abused credits on the IRS radar. Aggressive promoters continue to encourage businesses to file amended returns claiming ERC refunds they don’t actually qualify for—often in exchange for a percentage-based fee.
The IRS has made it clear: businesses that improperly claim the ERC are liable for repayment, plus interest and penalties. If a promoter is guaranteeing you a large ERC refund with minimal documentation, that’s a red flag. Verify your eligibility with a licensed tax professional before filing any amended return.
Phishing And Spear Phishing Attacks
Phishing scams have grown more sophisticated. Generic “click here to verify your account” emails have given way to spear phishing—targeted attacks that use your business name, employee information, or vendor details to appear legitimate.
Common scenarios include emails that appear to come from the IRS requesting immediate payment, fake payroll software notifications asking you to re-enter banking credentials, and fraudulent W-2 requests sent to HR staff. The IRS does not start contact with taxpayers via email, text, or social media. Any message claiming to be from the IRS through those channels should be treated as fraudulent.
Business Identity Theft
Small businesses are increasingly targeted for identity theft, not just individuals. Fraudsters use stolen Employer Identification Numbers (EINs) to file fake tax returns, claim fraudulent refunds, or open lines of credit. In some cases, business owners don’t discover the theft until they attempt to file their own return and find it has already been submitted.
Protecting your EIN with the same vigilance you apply to your Social Security Number is a good starting point. The IRS also offers an Identity Protection PIN (IP PIN) program that adds a layer of authentication to returns.
Fake Or Unqualified Tax Preparers
Tax preparation fraud spikes every filing season. Dishonest preparers—sometimes called “ghost preparers”—may inflate deductions, fabricate business expenses, or claim credits you don’t qualify for. They often charge fees based on the size of your refund, which creates an obvious incentive for dishonesty.
A legitimate tax preparer must have a valid Preparer Tax Identification Number (PTIN) and sign every return they prepare. The IRS Directory of Federal Tax Return Preparers (available at irs.gov) lets you verify credentials before handing over your financial records.
Misleading Offers In Compromise “Mills”
An Offer in Compromise allows qualifying taxpayers to settle their debt for less than the full amount owed. That’s a real IRS program. What isn’t legitimate is the cottage industry of companies that charge large upfront fees to apply on your behalf—often to taxpayers who don’t actually qualify.
These “OIC mills” frequently make promises they can’t keep, leave clients worse off than before, and disappear once fees are collected. If you’re dealing with tax debt, contact the IRS directly or work with a credentialed tax professional such as a CPA, enrolled agent, or tax attorney.
Bogus Self-Employment Tax Schemes
Some promoters are advising self-employed individuals and small business owners to incorrectly report income and expenses in ways that eliminate or drastically reduce self-employment tax obligations. These schemes are being actively pursued by IRS Criminal Investigation and often result in back taxes, interest, and penalties far exceeding any supposed savings.
Stay Informed Before Filing Season Ends
Tax scams don’t follow a calendar—they adapt. The IRS updates the Dirty Dozen list annually, and the tactics used by fraudsters evolve every year alongside changes in tax law and technology. For small business owners, the most effective defense is a combination of professional guidance, healthy skepticism, and staying current on the schemes that are actively circulating.
Since 2005, Quikstone Capital Solutions has been a trusted advisor to thousands of merchants. Quikstone provides these merchants with easy, fast, and flexible working capital for all their business needs. If you need cash for your business, contact us today. We have only one goal: to help your business succeed.
