Beware of Misleading Social Media Tax Advice

September 8, 2024

The IRS has issued an alert (IR-2024-139) warning about scams and misleading social media advice that lead to false claims for various tax credits. Fraudsters are using social media to spread false claims, resulting in delayed refunds, audits, penalties, and even imprisonment. These deceptive practices have caused thousands of inflated refund claims, prompting the IRS to ramp up its compliance efforts.

Common Tax Scams to Avoid

The IRS has identified several common tax scams related to:

• Fuel Tax Credit (Form 4136): This tax credit is meant for specific uses like off-highway business, farming, aviation, and commercial fishing. If you don’t fall into these categories, you’re not eligible.
• Sick and Family Leave Credit for Self-Employed Individuals (Form 7202): This tax credit was for self-employed individuals during the pandemic. Misusing Form 7202  can lead to penalties.
• Overstated Withholding: This involves falsifying income and withholding information on tax forms like Form W-2 or Form 1099 to claim large refunds. The IRS verifies all withholding claims, so these scams will be caught.
• Household Employment Taxes (Schedule H): Fraudulent claims related to household employment taxes can also lead to penalties and audits.

 

Key Points to Remember:

• Social Media Misinformation: Be cautious of tax advice on social media. It can sometimes be misleading and lure unsuspecting taxpayers into trouble.

• IRS Letters: If the IRS identifies a suspicious tax refund claim, you may receive letters such as 5747C, 4883C, or 5071C, asking you to verify your identity and tax return information. Follow the instructions carefully to resolve these issues.

• Legal Consequences: The penalty for frivolous tax claims is $5,000 per return, and can lead to penalties, compliance audits, or even criminal prosecution.

 

What To Do if You Receive an IRS Letter:

• Follow Directions: If you receive a 3176C letter, follow the instructions and submit a complete and accurate tax return within 30 days.
• Submit Documentation: Provide any necessary documentation to verify your claims.
• Correct Errors: If you filed an inappropriate claim, amend your tax return as instructed.
• Stay Informed: The IRS has issued these FAQs to provide general tax information quickly, but they may not cover every specific situation. Always file complete and accurate tax returns and rely on trusted sources for tax advice.

 

If you have any concerns or questions about your tax preparation, don’t hesitate to contact us. We’re here to help you navigate these tax complexities and ensure your filings are accurate and compliant. 

Stay safe and informed with Grants Pass Tax Service!

 

Image by Becca Tapert