Every day another scam happens.
Now, the Internal Revenue Service is warning taxpayers not to fall victim to a new scam involving the purchase of clean energy tax credits.
The IRS said in a statement that “unscrupulous tax preparers” are misrepresenting the rules for the clean energy credit, telling people they are receiving a credit they are not actually entitled to. The scams typically target individuals who file Form 1040, which is used to determine how much tax they owe the IRS and whether they are due a tax refund.
“This is another example of how scammers are using the complexities of the tax code to trick people into claiming deductions they are not entitled to.” IRS Commissioner Danny Wuerfel said in a statement. “Taxpayers should be wary of promoters of these dubious tax credits. The IRS is on the lookout for this scam and urges taxpayers to use a trusted tax professional before claiming complex tax credits like clean energy.”
Tax credits can only be purchased to offset income taxes resulting from what the IRS calls “passive activities.” Rental property or some limited liability partnerships. According to the IRS, most taxpayers have neither passive income nor a passive income tax liability.
Improperly claiming these deductions can land filers in trouble with the IRS and ultimately require them to pay back excessive deductions, plus interest and penalties. Taxpayers are advised to consult with their tax advisors and to be wary of any deductions they are offered that can be purchased to reduce their tax liability.
The clean energy credit scam is just the latest one the IRS has identified. In the past, there have been similar scams involving the fuel tax credit, sick and family leave credit and household employment tax.
