The Internal Revenue Service is making some changes this tax season in an effort to combat tax scams in areas like the Fuel Tax Credit.
The IRS is teaming up with partners in the Coalition of Scam and Scheme Threats as part of the effort.
Convened at the request of IRS Commissioner Danny Werfel, the CASST task force of federal and state tax agencies, software and financial companies, as well as key national tax professional associations, agreed to
"Since its creation, this special group across the tax community has been working to take extra steps to protect taxpayers and the tax professional community," Werfel said in a statement Tuesday. "This effort includes expanding outreach and education on emerging scams, developing innovative approaches to identify potentially fraudulent returns at the point of filing and creating infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems. CASST partners have already worked together on important changes to protect taxpayers and tax professionals in the 2025 filing season, but this needs to be an ongoing effort given the continued expansion and threats from scams."
The IRS noted that the Fuel Tax Credit has been promoted on social media as a tax break by promoters, but it's available to relatively few taxpayers. The tax credit is designed for off-highway business and farming use, and taxpayers need to have a legitimate business purpose and a qualifying business activity such as running a farm or purchasing aviation gasoline to be eligible for the credit. Most taxpayers don't qualify to claim the credit. The IRS has developed the "Statement Supporting Fuel Tax Credit (FTC) Computation - 1" to educate taxpayers on eligibility requirements for claiming the credit.
The IRS is also stepping up its review of various "other withholding" claims on Form 1040 that have been exploited by scammers and schemers. To decrease potential delays in verifying the "Other Withholding" claimed, the IRS is encouraging taxpayers to attach the supporting documentation to their tax return. Some of the main forms covered by Line 25c, "Other Withholding", include Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding; Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax; Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests; Form W2G, Certain Gambling Winnings; Form 8959, Additional Medicare Tax; and Schedule K1, Partner's Share of Income, Deductions, Credits, etc.
The IRS is reaching out to taxpayers who have potentially been using "ghost preparers" to prepare tax returns. These preparers don't identify themselves on the tax return, which is a red flag for taxpayers to be misled into a scam or scheme. During the 2025 filing season, the IRS will send letters to taxpayers whose tax returns appear to have been completed by a paid tax preparer who did not sign or include their Preparer Tax Identification Number on the tax return. The letters aim to educate taxpayers about "ghost preparers" and to help the IRS identify those who are being paid to prepare returns and are not signing or including their PTIN on the return. The IRS said it's continuing to see instances where ghost preparers dupe taxpayers into filing inaccurate tax returns for bigger refunds. The preparers later vanish like a ghost, leaving the taxpayer exposed to inaccurate claims.
During the 2025 filing season, the IRS plans to add more protections for tax professionals, aimed at protecting the tax pro's Electronic Filing Identification Number or EFIN and PTIN from unauthorized use. More details will be available in the near future.
