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The IRS recently announced a warning about taking tax advice on social media. Accepting bad advice on social media can result in IRS problems and identity theft. People who knowingly file fraudulently tax returns may be subject to significant civil and criminal penalties.
Some producers of misleading content have criminal motives and others are simply trying to get as many clicks as possible. Content is often posted to get attention, no matter how outlandish.
One of the common schemes encourages people to use tax software to fill out a W2. People are instructed to electronically file their return with large amounts of federal withholding to get a large refund. In addition to civil and criminal penalties, you can be subject to a frivolous return penalty of $5,000.
“Social media is an easy way for scammers and others to try encouraging people to pursue some really bad ideas, and that includes ways to magically increase your tax refund,” said IRS Commissioner Danny Werfel. “There are many ways to get good tax information, including @irsnews on social media and from trusted tax professionals. But people should be careful with who they’re following on social media for tax advice. Unlike hacks to fix a leaky kitchen sink or creative makeup tips, people shouldn’t rely on made-up ways on social media to patch up their tax return and boost their refund.”
People are also being encouraged to fraudulently file Form 7202. This form is used to receive a credit for self employed people who had Covid during the pandemic in 2020 and 2021. The credit is based on the number of days you were out of work due to Covid and the amount of your profit. People are being encouraged to amend their tax returns and falsely claim they had Covid to get the credit. Due to the number of fraudulent returns being filed, the IRS is auditing many of these returns.
Another scheme encourages people to create fictional household employees and file Schedule H and claim a refund based on false sick and family medical leave wages they never paid.
If you fall for one of these schemes, you will be responsible for your return. Before claiming a credit or deduction that you aren’t sure you are entitled to, be sure to do your research and seek advice from a qualified tax professional.
To help avoid falling for social media schemes, you should check their credentials. CPAs, Enrolled Agents and attorneys are less likely to provide misleading advice. The IRS has a directory of preparers with certain kinds of credentials, such as enrolled agents.
David Zubler is a nationally known tax accountant and Enrolled Agent that resides in East Tennessee. He is the author of six tax books and a syndicated columnist who has shared tax advice on podcasts and national TV and has been referred to as America’s Tax Guru. He is the founder and president of Your Tax Care. He represents clients nationwide before the IRS and provides tax strategies, and tax education, including David’s one-minute tax tip radio recordings at YourTaxCare.com. David can be reached at (865) 363-3019 or by email at david@yourtaxcare.com.
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