It’s quite common for people to look for ways to lower their tax bills with the IRS. However, following bad advice from unreliable sources can lead to serious issues, possibly costing you a lot of money.
The IRS has reported a rise in fraudulent tax schemes being spread through social media. Many of these scams revolve around the misuse of tax credits, mainly focusing on things like fuel tax credits or credits related to illnesses and dependents. Unfortunately, this has caused numerous taxpayers to submit inaccurate or fraudulent tax returns, often leading to undeserved refunds or penalties.
“These schemes aren’t just misleading; they could end up costing taxpayers significantly,” said James Clifford, director of the IRS’s integrity and compliance services. “Those who act on this misinformation might face fines of up to $5,000, as well as denied claims and other penalties.”
According to Clifford, the IRS has already issued over 32,000 penalties, amounting to about $162 million.
“Our priority is the protection of taxpayers,” he remarked.
Since 2022, the IRS has noticed an uptick in dubious refund claims. This increase is attributed to deceptive social media posts and scams involving individuals posing as tax experts. Many of these fraudulent claims suggest that virtually all taxpayers qualify for credits that are actually meant for specific categories, like the self-employed or businesses.
The IRS has issued warnings about common characteristics of these scams:
- A social media post that claims everyone is eligible for a particular tax credit.
- A promise for “easy” or “quick” refunds with little to no documentation required.
- Advice to file an amended return, even when it’s unnecessary.
- Encouragement to disregard IRS communications or provide false information in responses.
Taxpayers who fall victim to such scams might face serious repercussions, including delayed or rejected refunds and penalties of up to $5,000 for submitting frivolous returns.
What should you do if you think you’ve been targeted?
First, correct the mistake by filing an amended return. It’s also vital to respond promptly to any correspondence from the IRS and consider consulting a tax professional for further guidance.
