In a warning posted to its website Monday, the IRS highlighted an increase in fraudulent tax schemes on social media platforms over the past three years. These schemes often involve the misuse of tax credits that are only available in specific situations, such as the Fuel Tax Credit and the Sick and Family Leave Credit, but are falsely advertised as being available to everyone.
Thousands of taxpayers have already filed “inaccurate and frivolous” returns based on this misleading advice. According to IRS Director of Return Integrity and Compliance Services James Clifford, at least 32,000 people have been issued penalties totaling more than $162 million.
“These schemes are not only misleading but can cost taxpayers dearly,” Clifford wrote on the IRS site. “People who follow this advice could end up with rejected claims and a penalty of up to $5,000 in addition to any other penalties that might apply … It’s in the taxpayer’s best interest to stay informed.”
The IRS identified several common traits of these scams, including social media posts claiming universal eligibility for certain tax credits, promises of “easy” or “fast” refunds with minimal documentation, instructions to file amended returns even if taxpayers didn’t originally qualify for the credits, and encouragement to ignore IRS letters or respond with false information.
Taxpayers who submit false claims could face serious consequences beyond the $5,000 civil penalty for filing a frivolous return, including delayed or denied refund claims and increased IRS scrutiny.
Those who believe they’ve filed an incorrect return can amend it using Form 1040-X, Amended U.S. Individual Income Tax Return. The IRS recommends seeking help from a tax professional or utilizing the agency’s official resources at IRS.gov.
Suspected tax scams can be reported to the IRS by emailing phishing@irs.gov.
Generative AI was used to organize information for this story, based on data provided by the IRS. It was reviewed and edited by MassLive.
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