The Internal Revenue Service (IRS) has warned taxpayers about a rise in fraudulent tax schemes circulating on social media.
Why It Matters
According to the agency, thousands of taxpayers have filed inaccurate returns after following misleading posts and bad actors posing as tax experts online. The problem prompted more than $162 million in penalties and 32,000 enforcement actions, the IRS reported.
False and inaccurate returns risk well-meaning taxpayers being on the hook for financial penalties.
What To Know
The IRS is warning taxpayers about a wave of fraudulent schemes spreading across social media that encourage the improper use of tax credits, such as the Fuel Tax Credit and the Sick and Family Leave Credit.
These scams have already led thousands of people to file inaccurate or frivolous returns, often ending in denied refunds and costly penalties.
Since 2022, the agency has tracked a sharp rise in dubious refund claims driven by misleading online posts and self-proclaimed “tax experts.” Many of these posts wrongly suggest that every taxpayer qualifies for credits, even those that apply to specific tax situations.
How To Spot Tax Scams
Tax scams often follow a predictable playbook, making them easier to spot if you know what to look for. Common red flags the IRS has warned of include social media posts that insist everyone qualifies for certain tax credits, or promoters who promise “easy” or “fast” refunds with little to no documentation.
Some scams even encourage taxpayers to file amended returns, regardless of whether they were ever eligible for the credits. They also advise ignoring IRS letters or responding with false information.
Falling for these schemes can carry serious consequences. Taxpayers who file false claims risk delayed or outright denied refunds and may be hit with a $5,000 civil penalty under Internal Revenue Code Section 6702 for submitting a frivolous return. Beyond that, they could also find themselves subject to IRS examinations and enforcement actions.
What People Are Saying
James Clifford, IRS’s director of return integrity and compliance services, said in a news release: “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. So far, the IRS has imposed over 32,000 penalties costing taxpayers more than $162 million. It’s in the taxpayer’s best interest to stay informed.”
What Happens Next
The IRS advises taxpayers who suspect they were misled to amend returns using Form 1040-X, respond promptly to any IRS notices and consult reputable tax professionals or official IRS resources when filing taxes.
The federal agency recommends following verified IRS social media accounts and subscribing to e-news to avoid misinformation. It also provides channels for reporting scams, including emailing [email protected] and filing complaints with the treasury inspector general for tax administration.
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