Watch out for Tax Preparers Pushing Business Credit Claims

INDIANAPOLIS – The Indiana Department of Revenue (DOR) continues to partner with the Internal Revenue Service (IRS) to share the top tax filing season concerns referred to as the “IRS Dirty Dozen” tax scams for 2018.

The seventh scam in the 12-part series is making improper claims for business credits, which is often used by deceitful tax preparers. These preparers often talk the client into claiming a research credit or a fuel tax credit, for example, when they are not qualified for such credits to generate a larger refund or reduce the amount of money owed.

“Choosing a tax preparer is one of the most important decisions an individual or business can make during tax season,” said DOR Commissioner Adam Krupp. “By doing some research and ensuring their selected tax preparer is qualified and legitimate, customers can save themselves from penalties, fees and even criminal charges.”

Misuse of the research credit generally involves businesses who do not participate or provide evidence to support qualified research activities or expenses. To qualify, a business’ research activities must involve a process of experimentation using science with a goal of improving a product or a process. However, not all activities that meet this criteria qualify.

More information on the research credit can be found on the IRS website at

Fraud involving the fuel tax credit is often the result of a taxpayer making a false claim or an identity thief claiming credits as part of a larger scheme. The fuel tax credit is generally limited to off-highway business use or use in farming, therefore most taxpayers do not qualify for this credit.

“Customers should always understand the credit qualifications and ensure the credits they are claiming are legitimate,” said Commissioner Krupp. “Not only that, but they should always have the necessary documentation to back up their claim.”

More information on the fuel tax credit can be found on the IRS website at

For more information on Indiana tax credits, visit DOR’s website at

To view the first five of “IRS Dirty Dozen” tax scams of 2018, visit

About Brian Scott

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