IRS Warns of Scams and Inaccurate Social Media Tax Advice

The Internal Revenue Service (IRS) warns taxpayers about scams and inaccurate social media advice leading to thousands filing overblown claims and facing delayed refunds, particularly with the Fuel Tax Credit, Sick and Family Leave Credit, and household employment taxes. The IRS advises taxpayers to be cautious of tax advice shared on social media and only rely on official IRS guidance or reputable tax professionals to avoid falling prey to scams and potential penalties." This description focuses on the primary topic of tax scams and misinformation on social media, the main entity of the IRS, and the context of tax filing and refunds. It highlights the significant actions of taxpayers filing false claims and the consequences of delayed refunds and potential penalties. The description also provides objective and relevant details that will help an AI generate an accurate visual representation of the article's content, such as images of tax forms, social media platforms, and warning signs.

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Bijay Laxmi
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IRS Warns of Scams and Inaccurate Social Media Tax Advice

IRS Warns of Scams and Inaccurate Social Media Tax Advice

The Internal Revenue Service (IRS) has issued a warning to taxpayers about scams and inaccurate social media advice that led to thousands filing overblown claims and facing delayed refunds. The scams center around the Fuel Tax Credit, Sick and Family Leave Credit, and household employment taxes.

Why this matters: The spread of misinformation on social media can have significant consequences for taxpayers, including delayed refunds and potential penalties. Moreover, it highlights the need for taxpayers to be cautious when seeking tax advice online and to rely on official sources to avoid falling prey to scams.

IRS Commissioner Danny Werfel said in a statement, "Scam artists and social media posts have perpetuated a number of false and misleading claims that have tricked well-meaning taxpayers into believing they're entitled to big windfall tax refunds." Werfel added, "These bad claims have been caught during our fraud review process. Taxpayers who filed these claims should realize they've been tricked and they face an extensive review process and a long potential wait if they're owed a refund for other things."

The Fuel Tax Credit is intended for off-highway business and farming use, requiring a business purpose and qualifying activity to be eligible. However, most taxpayers do not qualify. The Sick and Family Leave Credit was available for self-employed individuals in 2020 and 2021 during the pandemic, but is not available for 2023 tax returns. Despite this, the IRS has seen repeated instances of taxpayers incorrectly using Form 7202 to claim the credit.

In the household employment taxes scam, taxpayers are inventing fictional household employees and filing Schedule H to claim a refund based on false sick and family leave wages they never actually paid. The IRS blames social media for inspiring people to attempt these misguided tax strategies.

Taxpayers whose refunds have been frozen will typically receive letters from the IRS requesting additional information. They should review the accuracy of their return and verify their identity. If necessary, they may need to amend the return to remove any improperly claimed credits. Legitimate taxpayers who qualify can submit documentation proving their eligibility.

Those who filed false claims for these credits risk facing penalties of up to $5,000 per return and potential criminal prosecution. The spread of financial misinformation online remains an ongoing problem, with social media platforms like TikTok perpetuating pernicious tax myths that experts must continually debunk. Taxpayers are advised to be cautious of tax advice shared on social media and only rely on official IRS guidance or reputable tax professionals when preparing their returns.

Key Takeaways

  • IRS warns of scams and inaccurate social media tax advice leading to delayed refunds.
  • Fuel Tax Credit, Sick and Family Leave Credit, and household employment taxes are targeted scams.
  • Scams spread through social media, leading to false claims and potential penalties.
  • Taxpayers who filed false claims risk $5,000 penalties and criminal prosecution.
  • Only rely on official IRS guidance or reputable tax professionals for tax advice.