On September 18, 2026, the IRS issued IR-2026-112, warning taxpayers, tribal communities, businesses, and tax professionals about promoters selling fake federal tax credits under names such as “Tribal Tax Credits” and “Native American Tax Credits.”
What the IRS Announced
The IRS said these purported federal credits do not exist. Promoters may claim that taxpayers can buy them to reduce an existing federal tax liability or generate a refund, sometimes while pressuring prospective buyers to act quickly.
A return that claims a nonexistent credit contains a false claim even if the IRS initially accepts the return or issues a refund. The IRS noted that taxpayers are responsible for the accuracy of their returns and may face assessment of the correct tax, penalties, interest, and potentially criminal consequences for participating in an abusive scheme.
How Promoters Make the Scheme Look Credible
According to the IRS, promoters may misuse legitimate tax provisions or government programs to support their pitch. Examples include:
- Claiming that an unpublished agreement among federal agencies and tribal governments converts tribal trust fund payments into federal tax credits
- Misrepresenting rules that allow transfers of certain clean-energy credits
- Suggesting that the New Markets Tax Credit under Section 45D creates a Tribal Tax Credit
- Claiming that tribal ownership or sovereign status creates a federal credit
- Citing executive orders or federal tax provisions that do not authorize the claimed credit
- Pointing to an accepted return as proof that the IRS approved the credit
The IRS stated that no federal statute or government agreement creates the promoted Tribal Tax Credit.
Warning Signs to Watch For
The IRS identified several red flags:
- An offer to buy a tax credit for substantially less than its stated value
- Claims that only a limited number of credits are available
- Pressure to act quickly
- References to government agreements that are not publicly available
- Legal opinions that cannot be verified directly with the named attorney or law firm
- A request to sign a nondisclosure agreement before receiving basic information
Promoters may also charge fees to arrange the supposed purchase, produce supporting documents, or provide purported legal opinions.
How to Report a Suspected Scheme
Taxpayers and tribal communities can report suspected abusive tax promotions or preparers using Form 14242, Report Suspected Abusive Tax Promotions or Preparers. Information about tax fraud or other illegal tax activity can also be submitted through the IRS tip-reporting page.
Before claiming an unfamiliar credit, verify it through current IRS guidance and consult a qualified, independent tax professional rather than relying on materials supplied by a promoter.
Why It Matters for Small Business Owners
A Schedule C filer remains responsible for claims made on a federal return, including claims recommended by a promoter or preparer. Be cautious of arrangements promising a large reduction in tax or a refund through a credit that cannot be confirmed on IRS.gov.
Simple-C helps Schedule C filers keep income, expenses, and supporting records organized — making it easier to provide accurate business records to a trusted tax professional.
This article provides general information, not tax or legal advice. Tax rules and enforcement guidance can change. Confirm current information on IRS.gov and consult a qualified tax professional about your circumstances.