The IRS is tightening its rules for the 2025 tax season, with the agency announcing on Tuesday that it will be targeting scams and fraudulent claims with enhanced oversight and penalties.

The IRS announced on Jan. 14 that it will implement new measures targeting fraudulent activities, including requiring taxpayers claiming the Fuel Tax Credit to provide a detailed eligibility statement. Additionally, the agency will intensify its review of tax returns with substantial amounts reported under “Other Withholding” on Form 1040, aiming to identify and prevent improper claims.

IRS Commissioner Danny Werfel said the changes are part of broader efforts to protect taxpayers and safeguard the integrity of the tax system ahead of the upcoming filing season.

“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,” Werfel said in a statement.

In this effort, the IRS is collaborating with the Coalition Against Scam and Scheme Threats (CASST), a task force Werfel convened in mid-2024 that brings together federal and state tax agencies, software and financial companies, and tax industry associations.

“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,” Werfel said.

Key Changes for 2025 Filing Season

One major change is the introduction of the “Statement Supporting Fuel Tax Credit (FTC) Computation - 1,” aimed at ensuring only eligible taxpayers claim the Fuel Tax Credit. This new statement, included in the instructions for Form 4136, must be completed by individuals filing Form 1040 who claim credits for nontaxable use of fuels such as gasoline, diesel, or kerosene.

The statement requires detailed business information and the type of machinery or vehicle for which the fuel was purchased. Taxpayers must also include a table comparing the estimated and actual fuel costs based on average fuel prices provided by the U.S. Energy Information Administration. While taxpayers do not need to attach receipts or additional documentation to their returns, they must keep these records on file in case the IRS requests proof later. Erroneous claims for the credit could result in a $5,000 penalty.

Another change involves increased IRS scrutiny of “Other Withholding” claims reported on Line 25c of Form 1040. This enhanced scrutiny is intended to detect and prevent improper or inflated claims that could unfairly reduce tax liabilities, the IRS said, noting that such claims have been the target of “scammers and schemers.” The IRS announcement encouraged taxpayers to include supporting documentation for these claims, which often involve forms such as Form 1042-S (foreign income withholding), Form 8805 (foreign partner withholding), and Form W-2G (gambling winnings).

The IRS is also addressing the issue of “ghost preparers”—paid tax preparers who fail to sign returns or include their Preparer Tax Identification Number (PTIN). During the 2025 filing season, the IRS will send educational letters to taxpayers whose returns appear to have been prepared by such individuals, warning them about potential inaccuracies and encouraging them to seek legitimate preparers. Ghost preparers often file inaccurate returns to secure larger refunds, leaving taxpayers liable for errors, the agency said.

Finally, the IRS plans to enhance protections for tax professionals by safeguarding their Electronic Filing Identification Numbers (EFINs) and PTINs from unauthorized use. The agency did not provide details about these protections, noting that they are expected to be released in the near future.