IRS Alerts Taxpayers About Costly Tax Advice

The IRS is cautioning Americans to be vigilant regarding tax guidance they come across online, as it could end up costing them quite a bit of money.

These types of schemes are quite prevalent on social media platforms, often promoting misleading advice on utilizing tax credits.

Commonly misapplied credits include those for sick leave, family leave, and fuel taxes. It’s important to be aware of the risks associated with these claims.

If these credits are misused, your tax return could be flagged as inaccurate or even fraudulent, leading to withheld refunds and potential fines.

James Clifford, who heads the IRS Return Integrity and Compliance Services, remarked, “These schemes are not only misleading but can impose a significant financial burden on taxpayers. Those who act on this advice may face fines up to $5,000, along with rejected claims and further penalties.”

So far, around 32,000 penalties have been issued, adding up to an astonishing $162 million in costs for taxpayers across the country.

This trend started becoming widespread in 2022 when taxpayers fell victim to dishonest advice from individuals posing as tax experts on social media. Many of these posts claim that taxpayers qualify for credits that, in reality, have specific requirements, such as being a business entity or self-employed.

The IRS has highlighted some characteristics of these scam posts:

• A claim that everyone qualifies for a specific tax credit.
• A promise of “easy” or “fast” refunds requiring little documentation.
• An instruction to file an amended return even when the credit is valid for the original return.
• A suggestion to disregard IRS correspondence or to reply with false information.