IRS Dirty Dozen 2026: The 12 Tax Scams Targeting NJ Taxpayers This Filing Season

Every year the IRS publishes its "Dirty Dozen" list of the most prevalent tax scams. The official 2026 list, announced by the IRS on irs.gov, includes threats that did not exist two years ago - AI-enabled phone scams that clone IRS agents' voices, phishing emails polished by language models, abusive undistributed capital gains (Form 2439) claims that exploded after going viral on social media, and bogus "Self-Employment Tax Credit" promotions. I review the full list every year and add the NJ-specific angles that the IRS national press releases do not cover.

I wrote this during the 2026 filing season because that is when NJ taxpayers are most vulnerable: you are checking your email for tax documents. You are expecting correspondence from the IRS or the NJ Division of Taxation. You are searching for tax help online. Scammers know this, and they have gotten dramatically better at exploiting it.

This guide covers all twelve scams on the IRS's official 2026 Dirty Dozen announcement, in the order the IRS listed them, with additional NJ-specific warnings about Division of Taxation phishing, NJ identity theft procedures, and ANCHOR program scams that target New Jersey residents specifically. Every protection step is practical and actionable.

In This Article

1. IRS Impersonation by Email and Text (Phishing and Smishing)
2. AI-Enabled IRS Impersonation Phone Scams
3. Fake Charities
4. Misleading Tax Advice on Social Media
5. Identity Theft Through Fake IRS Online Account Help
6. Abusive Undistributed Capital Gains (Form 2439) Claims
7. Bogus "Self-Employment Tax Credit" Promotions
8. Ghost Tax Preparers
9. Non-Cash Charitable Contribution Schemes
10. Overstated Withholding Schemes
11. Spear-Phishing and Malware Targeting Tax Professionals
12. Aggressive Offer in Compromise Mills
13. NJ-Specific Scam Warnings
14. How to Report a Scam
15. FAQ

1. IRS Impersonation by Email and Text (Phishing and Smishing)

Phishing emails and text messages ("smishing") impersonating the IRS lead the official 2026 list. What is new is the quality: AI language models are generating phishing emails that are grammatically perfect, correctly reference current tax law provisions (like the OBBBA), include accurate IRS addresses and phone numbers, and mimic the formatting of genuine IRS notices down to the notice number and response deadline.

What has changed:

• AI-generated emails no longer contain the spelling errors and awkward phrasing that used to identify them
• QR codes in text messages direct to fake IRS payment portals that are pixel-perfect replicas of IRS.gov
• Some phishing campaigns reference specific OBBBA provisions (like the overtime deduction or tip deduction) to appear current and legitimate

How to identify fakes:

• The IRS does not initiate contact by email, text, or social media. Period. The first contact for any tax matter is a letter sent via US Mail.
• Any email claiming to be from the IRS is fake
• Any text message claiming to be from the IRS is fake

Protection: If you receive a suspicious communication, do not click any links, do not call any phone numbers in the message, and do not provide any personal information. Report phishing emails to phishing@irs.gov.

2. AI-Enabled IRS Impersonation Phone Scams

New as its own entry for 2026: phone scams using AI voice technology to impersonate IRS agents. Deepfake voice calls mimicking IRS agents have been reported to the Treasury Inspector General for Tax Administration (TIGTA), complete with spoofed caller IDs, fabricated badge numbers, and AI-generated robocalls that respond conversationally to your questions.

How to identify fakes:

• Any phone call demanding immediate payment via gift card, wire transfer, or cryptocurrency is fake
• The IRS will never threaten arrest, deportation, or license revocation by phone
• If you did not initiate the call, hang up and call the IRS directly using the number on irs.gov

The IRS will never call you demanding immediate payment by gift card, wire transfer, or cryptocurrency. If someone does, hang up and report to TIGTA at 800-366-4484.

Protection: Report phone scams to TIGTA at 1-800-366-4484.

3. Fake Charities and Disaster Fraud

After every natural disaster, fake charities emerge to collect donations that never reach victims. The IRS warns generally about disaster-related fake charities; scammers typically invoke whatever is in the news, such as recent hurricanes, western wildfires, or international crises. Some fake charities also operate year-round, targeting religious communities and elderly taxpayers.

How the scam works:

• Fake charity collects donations via phone, email, or GoFundMe-style platforms
• Donor claims charitable deduction on Schedule A
• The IRS may deny the deduction because the organization is not a qualified 501(c)(3)
• The donor loses both the money donated and the tax deduction

Protection: Before donating, verify the organization's tax-exempt status using the IRS Tax Exempt Organization Search (opens in a new tab) tool. Be cautious of organizations with names similar to well-known charities. Never donate via gift card, wire transfer, or cryptocurrency to an unfamiliar organization. Cash donations of $250 or more require a written acknowledgment from the charity to be deductible.

4. Misleading Tax Advice on Social Media and "Free Money" Schemes

TikTok, Instagram, YouTube, and X (formerly Twitter) are flooded with tax advice that ranges from incomplete to outright fraudulent. The 2026 list highlights viral videos claiming you can:

• Write off your entire rent as a home office deduction
• Claim your dog as a dependent
• Deduct your entire car payment (not just the IRC §163(h)(4)(D) interest portion, but the full principal-plus-interest payment)
• Claim fuel tax credits (Form 4136) for personal vehicles

The fuel tax credit scam is particularly dangerous. Form 4136 is a legitimate credit for off-highway business use of fuel (farming, construction, commercial fishing). It is not for commuting or personal driving. The IRS has identified thousands of fraudulent Form 4136 claims generated by social media advice, and is imposing the 75% fraud penalty on filers.

Protection: Do not take tax advice from social media without verifying it with a qualified professional. If something sounds too good to be true, it is. Legitimate tax deductions require substantiation, and legitimate credits require qualifying activities.

5. Identity Theft Through Fake IRS Online Account Help

Scammers pose as "helpful" third parties offering to set up your IRS Individual Online Account. The pitch arrives by phone, social media, or online ads: they will handle the sign-up for you, or "unlock" a payment or refund supposedly tied to the account. In reality, the account is free and easy to create yourself. What the scammer wants is the personal information you hand over in the process - SSN, photo ID, address history - which is then used to file fraudulent returns and redirect refunds.

Protection:

• Set up your IRS Online Account yourself, directly at irs.gov/account; no third party is needed
• Never give your SSN, login credentials, or photo ID to someone who contacted you offering account help
• Request an IP PIN from the IRS (irs.gov/ippin) and monitor your IRS account for unexpected filings
• If you are a victim: file IRS Form 14039 (Identity Theft Affidavit) and NJ Form IDT-100 (Identity Theft Declaration), and consider a credit freeze with all three bureaus

6. Abusive Undistributed Capital Gains (Form 2439) Claims

This entry covers a scheme most likely to affect ordinary filers. Form 2439 (Notice to Shareholder of Undistributed Long-Term Capital Gains) is a legitimate form used by regulated investment companies (RICs) and real estate investment trusts (REITs) to report undistributed capital gains to shareholders. The shareholder claims a credit for tax already paid by the fund on those gains.

The scam: Promoters on social media and through online ads are coaching people to file fabricated Form 2439 claims for funds they never invested in, reporting fictitious undistributed capital gains tax credits. The claimed credits offset their tax liability dollar-for-dollar, generating large refunds. Some promoters charge a percentage of the fraudulent refund as their fee.

Why it works: Form 2439 is obscure. Most taxpayers and even many tax preparers have never seen one. The credit flows through to Form 1040 in a way that is not immediately flagged by basic e-file validation. The IRS has identified thousands of fraudulent Form 2439 claims filed for 2024 and 2025, and the number is growing.

Red flags:

• Someone offers to "get you a tax credit" using Form 2439 when you do not own shares in a RIC or REIT that issued the form
• A preparer includes Form 2439 on your return without explaining it
• You see social media posts about "free money" from undistributed capital gains credits
• A promoter asks for a percentage of your refund as payment

Consequences: Filing a fraudulent Form 2439 claim is tax fraud. Penalties include the 75% civil fraud penalty under IRC Section 6663, interest on the underpayment, and potential criminal prosecution under IRC Section 7206 (filing a fraudulent return). The IRS has stated it is actively auditing all Form 2439 claims and has referred cases to the Criminal Investigation division.

Protection: Never file a Form 2439 claim unless you received the actual form from a regulated investment company or REIT in which you hold shares. If a preparer suggests it and you do not own qualifying investments, find a new preparer immediately. If you have already received an IRS notice about a questionable claim, see my guide on what to do when you receive an IRS notice.

7. Bogus "Self-Employment Tax Credit" Promotions

Promoters market a so-called "Self-Employment Tax Credit" that supposedly pays self-employed people and gig workers five-figure refunds. No such credit exists. The promotions misrepresent the narrow Credits for Sick Leave and Family Leave for certain self-employed individuals, which applied only to limited 2020 and 2021 circumstances; the IRS has said repeatedly that most people pushed into these claims do not qualify. The claims typically ride on Form 7202 with fabricated eligibility.

Red flags: social media posts promising a fixed dollar amount to every self-employed person, promoters charging a percentage of the refund, and preparers who file the claim without asking about your actual 2020-2021 facts.

Consequences: The IRS is freezing and reviewing these refund claims. Filers face repayment, accuracy-related or civil fraud penalties, and interest - and the promoter's fee is gone either way.

8. Ghost Tax Preparers

A ghost preparer is someone who prepares your tax return but refuses to sign it. Federal law requires paid preparers to sign returns and include their Preparer Tax Identification Number (PTIN). Ghost preparers avoid this to evade IRS oversight, usually because they are inflating deductions, fabricating income, or claiming credits you do not qualify for.

Warning signs:

• The preparer insists on paper filing only (to avoid the electronic signature requirement)
• The preparer refuses to provide a PTIN
• The preparer directs your refund to their bank account rather than yours
• The preparer charges a fee based on a percentage of your refund
• The preparer cannot or will not explain the deductions and credits on your return

NJ-specific risk: New Jersey does not license tax preparers (unlike Oregon, California, Maryland, and New York, which have state-level registration or licensing requirements). Any person in NJ can prepare a tax return for compensation without any education, testing, or registration with the state. This makes NJ especially susceptible to ghost preparers. The only federal protection is the PTIN requirement.

Protection: Always verify your preparer has a PTIN. Ask for a copy of the return before filing and review it for accuracy. Never allow a preparer to direct your refund anywhere other than your own bank account. The IRS Choosing a Tax Professional (opens in a new tab) page links to its current federal preparer directory and credential guidance. For professional preparation, see our tax preparation services.

9. Non-Cash Charitable Contribution Schemes

These schemes inflate deductions for donated property. Promoters arrange for taxpayers to acquire an asset (art, collectibles, or other property interests) at a low price, obtain an inflated appraisal, donate the asset, and claim a charitable deduction worth several times what was actually paid. The donation may be real; the valuation is not.

Red flags: a promoter who supplies the appraiser, promised deductions that are multiples of your cost, and pressure to complete the acquisition-and-donation cycle quickly.

Protection: Non-cash contributions over $500 require Form 8283, contributions over $5,000 generally require a qualified appraisal, and the IRS actively challenges inflated valuations with accuracy and appraiser penalties (IRC Sections 6662 and 6695A). If the tax deduction is the product being sold, walk away. Cash donations over $250 still require a written acknowledgment from the charity.

10. Overstated Withholding Schemes

A scheme circulating heavily on social media: file a return with a fabricated Form W-2, 1099, or substitute form (such as Form 4852) showing large fictitious income and even larger fictitious federal withholding, then claim the excess withholding as a refund. Variants use fake household-employee wages or fabricated Schedule H entries.

Why it fails: The IRS matches withholding claims against employer and payer filings before releasing refunds. Returns with unverifiable withholding are frozen, refunds are held, and the filer faces the $5,000 frivolous-return penalty under IRC Section 6702, accuracy or fraud penalties, and potential criminal exposure.

Protection: Report only withholding shown on genuine forms actually issued to you. If a preparer or online coach suggests inventing withholding, that is fraud, not a loophole.

11. Spear-Phishing and Malware Targeting Tax Professionals

This one affects you indirectly. Scammers target CPAs, enrolled agents, and tax attorneys with sophisticated spearphishing attacks designed to steal client data, including Social Security numbers, financial information, and prior-year returns. A successful breach at your preparer's office can result in fraudulent returns filed in your name.

What tax professionals are seeing in 2026:

• Emails impersonating IRS e-Services requesting credential verification
• Fake Intuit/Drake/Lacerte login pages designed to harvest practitioner portal credentials
• Ransomware attacks encrypting client files with demands for cryptocurrency payment
• Deepfake phone calls from "clients" requesting emergency return information

Protection (for taxpayers): Ask your tax preparer about their data security practices. A reputable firm should have encrypted storage, two-factor authentication, written information security plans (required by the FTC Safeguards Rule), and cyber liability insurance. If your preparer cannot articulate basic security practices, consider whether your data is safe.

12. Aggressive Offer in Compromise Mills

An Offer in Compromise (OIC) is a legitimate IRS program allowing taxpayers to settle tax debt for less than the full amount owed. The acceptance rate is approximately 30-40%. OIC mills advertise on TV and radio with claims like "settle your tax debt for pennies on the dollar" and charge thousands in upfront fees to submit applications that have no realistic chance of acceptance.

Reality check:

• The IRS accepted approximately 15,000 OICs in 2024 out of roughly 45,000 filed
• The average settlement was 20-25% of the total debt
• The IRS formula is based on your ability to pay, not a negotiation
• If you have equity in assets or stable income, you will likely not qualify
• Many mills file the application, collect the fee, and provide no further assistance when the OIC is rejected

Protection: Before paying anyone to file an OIC, use the IRS Offer in Compromise Pre-Qualifier (opens in a new tab) tool. It is free and gives you a realistic estimate. If your situation warrants an OIC, work with a CPA, enrolled agent, or tax attorney - not a company you found from a TV commercial.

NJ-Specific Scam Warnings

NJ Division of Taxation Phishing

The NJ Division of Taxation has issued multiple alerts about emails and text messages impersonating the Division. These typically claim you owe additional NJ tax, threaten to suspend your driver's license, or promise an ANCHOR program rebate if you click a link.

The NJ Division of Taxation communicates via US Mail. Any email or text claiming to be from the NJ Division of Taxation is fraudulent. Report it to the Division at taxation.fraud@treas.nj.gov.

NJ Identity Theft Procedures

If you are a victim of NJ tax identity theft:

1. File a police report with your local NJ police department
2. Submit NJ Form IDT-100 (Identity Theft Declaration) to the NJ Division of Taxation
3. File IRS Form 14039 for federal identity theft protection
4. Contact the NJ Division of Taxation Identity Theft Unit at (609) 292-6500
5. Place a fraud alert or credit freeze with all three credit bureaus
6. File early in subsequent years - the NJ system does not have an equivalent of the federal IP PIN

NJ ANCHOR Program Scams

The ANCHOR program (Affordable New Jersey Communities for Homeowners and Renters) provides property tax relief for NJ residents. Scammers exploit ANCHOR by:

• Sending fake ANCHOR approval emails with links to "claim your benefit"
• Calling homeowners claiming their ANCHOR application was "incomplete" and requesting SSN verification
• Creating fake ANCHOR application websites that harvest personal information

Protection: The ANCHOR application is filed through the NJ Division of Taxation website (nj.gov/treasury/taxation/anchor) or by phone. The Division will never email you to request personal information. Your ANCHOR benefit is paid by check or direct deposit to the account you specified on the application - it is never distributed through a link in an email.

How to Report a Tax Scam

Frequently Asked Questions

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Circular 230 Disclosure: This post provides general tax information and is not a substitute for personalized tax advice. Consult a qualified tax professional for advice specific to your situation.

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