Self-identified tax experts on platforms like TikTok have led to $162 million in fines for U.S. taxpayers since 2022, according to a recent IRS announcement.
Sharing advice on critical life decisions, whether about health or finances, has become increasingly accessible. However, experts highlight a concerning prevalence of false information.
Every year, misleading tax guidance circulates on social media, and there are identifiable patterns taxpayers should recognize. If it sounds too good to be true, it usually is—whether it’s about saving on taxes or securing an unexpectedly large refund.
The IRS has specifically flagged two fraudulent schemes recently, both related to inappropriate claims for certain tax credits: fuel tax credits and sick leave family credits.
Fuel tax credits are intended mainly for agricultural operations and “off-highway businesses,” which means they don’t apply to the average taxpayer, despite what social media claims.
The sick leave family credit was designed for self-employed individuals during the pandemic from 2020 to 2021, but it is not available in subsequent years. The IRS noted an increase in taxpayers improperly claiming Form 7202, sometimes even when they were employees, not self-employed.
Since 2022, there has been a notable rise in questionable refund requests attributed to misleading information shared on social media, as well as individuals posing as tax professionals.
The IRS advises caution regarding chains of posts that suggest universal eligibility for certain credits, promise quick refunds with minimal documentation, or urge people to ignore IRS correspondence and provide incorrect information.
“If the tax advice you find on social media seems overly advantageous, it’s wise to consult qualified tax professionals, like CPAs and tax attorneys, to verify the information,” warned Brewer. “In the end, it could save you significant trouble.”
Potential consequences for falling for this misinformation include delayed refunds, rejected claims, a possible $5,000 civil penalty, and even an IRS investigation.
Taxpayers misled by inaccurate information should amend their tax returns, respond to IRS letters, and seek help from reputable tax professionals.
