If you took “pro advice” from social media when doing your taxes this year, you could be facing an IRS audit or a delayed refund this year, the tax agency warned Tuesday.
Internal Revenue Service, in alarm, said a series of tax scams and inaccurate advice on social media has led to thousands of taxpayers artificially inflating their refund claims. Bad advice and scams primarily focused on gas tax credits, sick and family leave credits, and household employment taxes.
“The IRS has observed thousands of questionable claims in which taxpayers appear to be claiming credits they are not entitled to, resulting in delayed refunds and the need for taxpayers to prove they have legitimate documentation to support those claims,” – the warning says. . “The IRS continues to urge taxpayers to avoid these types of scams as myths continue to persist that this is a way to get a huge refund.”
This can result in severe financial penalties for people who fail to prove a claim. Some may face further scrutiny and even criminal prosecution for these claims.
The fuel tax credit, the tax agency said, is intended for off-road businesses and agricultural uses, and those claiming the credit must have a qualifying business. Most taxpayers don’t do this. Sick and family leave credits were available in 2020 and 2021 for self-employed individuals, but were not offered for the 2023 tax year. The IRS says many people still try to claim it even if they work full-time at a job.
The issue of household employment taxes has more to do with fraud than bad advice. The IRS says some taxpayers are creating fictitious domestic workers and then trying to claim refunds based on fake vacation wages that were never paid.
“These false claims are fueled by social media and people sharing bad advice,” said IRS Commissioner Danny Werfel. “Fraudsters constantly deceive people and try to exploit the complexity of the tax system to convince people that there are secret ways to get more compensation. These three scores show that it is important to carefully review a tax return for accuracy before filing it and rely on the advice of a trusted tax professional rather than some fly-by-night preparer or shady source they hear about on social media.”
Taxpayers whose refunds have been frozen for these claims will receive letters from the IRS asking for additional information. If they cannot provide this, they may have to amend their reports.