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Social Media Tax Scams

The Internal Revenue Service (IRS) has issued a consumer alert about a wave of tax scams and misleading social media advice that duped thousands of taxpayers into filing inflated refund claims during the past tax season. It’s a classic case of “if it’s on the internet, it must be true” — except when it’s not.

Once limited to telephone and emails, the bad guys are using influencers on social media who are unqualified in tax knowledge to mislead consumers. The promise of a lucrative refund is the common bait.

Tax Scams – More Fiction Than Fact

The IRS wants to ensure taxpayers don’t get swindled by scams involving the Fuel Tax Credit, the Sick and Family Leave Credit, and household employment taxes. Here’s a rundown of these too-good-to-be-true schemes:

  1. Fuel Tax Credit Scam – Unless you’re running a farm or flying planes, claiming this credit is like trying to milk a cow that doesn’t exist. This credit is strictly for off-highway business and farming uses. Most folks don’t qualify, no matter what that social media guru says.
  2. Sick and Family Leave Credit Misuse – Designed for self-employed individuals during the pandemic years of 2020 and 2021, this credit isn’t available for 2023 returns. Misusing Form 7202 to claim it based on your regular job income is a quick way to get your refund delayed and earn some extra attention from the IRS.
  3. Household Employment Taxes – Some inventive taxpayers have conjured up imaginary household employees to claim refunds for wages they never paid. Filing Schedule H (Form 1040) for phantom workers is as bad as it sounds and just as risky.

Got Caught in a Scam? Here’s Your Game Plan

If you’ve fallen for one of these internet fables, don’t panic. Here’s what you need to do to set things right:

⦁ Verify Eligibility – Check the IRS guidelines to see if you actually qualify for the credits you claimed. It’s like fact-checking that bizarre internet meme — turns out, not everything you read online is true. A trusted tax professional can help you sort through the details.

⦁ File an Amended Return – Made a mistake? No problem! Consider filing an amended return to remove those ineligible claims. The IRS even has a handy tool on their website, “Should I file an amended return?” to guide you through it. Think of it as your tax season GPS, recalculating your route to a safe filing.

⦁ Respond to IRS Letters – Taxpayers who have their refunds frozen will receive letters from the IRS requesting additional information. Think of it as a DM from a famous person. Respond promptly. Also, provide the necessary documentation to verify the claims. Ignoring these letters can lead to further complications, including financial penalties and potential audits.

The Price of Believing Everything Online

Filing improper claims can lead to some not-so-fun consequences. Picture hefty financial penalties, follow-up audits, or even criminal prosecution. The IRS has emphasized that scam artists and misleading social media posts have led many well-meaning taxpayers astray, causing them to submit incorrect claims. IRS Commissioner Danny Werfel put it bluntly: “These bad claims have been caught during our fraud review process. Taxpayers who filed these claims should realize they’ve been tricked, and they face an extensive review process and a long potential wait if they’re owed a refund for other things.”

Stay Scam-Savvy

To avoid becoming the next cautionary tale, here’s how to stay scam-smart:

⦁ Skepticism is Your Friend – Just because advice is trending on social media doesn’t mean it’s accurate. Cross-check with official IRS guidelines or consult a reputable tax professional. Remember, some things on the internet are as real as unicorns.

⦁ Beware of Ghost Preparers – These tax preparers vanish when it’s time to sign the return, leaving you holding the bag. A preparer who refuses to sign your tax return is a big red flag.

⦁ Review Before Filing – Ensure your tax return is accurate and that the credits you’re claiming are legit. It’s like proofreading an email to your boss — you don’t want to send it off with mistakes.

Tax scams are like urban legends — they sound intriguing but often lead to trouble. The IRS is working hard to catch fraudulent claims, but your vigilance is key. If you’ve filed incorrectly, don’t despair. Amend your return, consult a trusted tax professional, and steer clear of sketchy internet advice. By staying informed and cautious, you can navigate your tax filing smoothly and keep those too-good-to-be-true tax refunds where they belong: in the realm of internet myths.

If you would like help with your tax problem, contact Saunders Tax & Accounting at www.SaundersTax.com or call us at 301-714-2071. Open Monday – Thursday 9 am to 5 pm. Awarded the Hagerstown Chamber of Commerce “2023 Small Business of the Year” and Hagerstown Hotlist 2024, we have been providing a Less Taxing Life and More Prosperous Solutions for 40 years!

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