The IRS is issuing a stark warning to taxpayers about fraudulent tax schemes proliferating online, particularly via social media. These deceptive practices may lead individuals to lose significant amounts of money through incorrect tax advice, with many falling victim to scams that misrepresent how tax credits can be utilized.
Key concerns are centered around the misuse of certain tax credits, notably the Sick and Family Leave Credit, as well as the Fuel Tax Credit. Following improper guidance in utilizing these credits, taxpayers risk having their returns flagged as inaccurate or even fraudulent. This could lead to the withholding of refunds and the imposition of substantial penalties. James Clifford, the IRS director of Return Integrity and Compliance Services, emphasized the severity of these consequences, stating, “These schemes are not only misleading but can cost taxpayers dearly. People who follow this advice could end up with rejected claims and a penalty of up to $5,000 in addition to any other penalties that might apply.”
Alarmingly, the IRS has already issued 32,000 penalties related to these tax schemes, which have collectively cost taxpayers a staggering $162 million. The rise in these schemes has been particularly notable since 2022, when many began to receive dubious tax advice from individuals pretending to be tax professionals on social media platforms.
Common characteristics of these misleading posts include claims that anyone can qualify for various tax credits, promises of quick refunds with little to no documentation, and instructions to file amended returns despite not meeting the necessary qualifications. Additionally, these posts may encourage taxpayers to disregard communications from the IRS or to respond with false information.
Taxpayers are strongly advised to be cautious and seek legitimate, verified sources for tax-related guidance to avoid falling prey to these potentially costly scams.
