The IRS is alerting the public to a sharp increase in tax scams that are proliferating across social media platforms. Individuals posing as tax experts on Facebook, TikTok, and beyond are duping taxpayers into filing fraudulent refund claims by misusing credits like the Fuel Tax Credit or the Sick and Family Leave Credit, which are generally inapplicable to most filers.

Since 2022, such deceptive practices have led to a surge in frivolous tax returns. Unfortunately, many people who are lured by promises of easy money end up facing severe financial repercussions instead of receiving the refunds they expected. The IRS reports that over 32,000 taxpayers have faced fines totaling upwards of $162 million due to these scams.

James Clifford, Director of Return Integrity and Compliance Services at the IRS, warns, "These schemes are not only misleading but can also be quite costly. Taxpayers may face rejected claims and a penalty of up to $5,000, apart from other applicable penalties."

Spotting a Tax Scam Before It’s Too Late

It's crucial to recognize the common characteristics of these scams. Be wary of social media posts that claim everyone qualifies for specific credits, promise fast and easy refunds with minimal paperwork, instruct to file amended returns improperly, or advise ignoring or deceiving responses to IRS communications.

The Real Cost of Falling for a Scam

Engaging with these scams can lead to prolonged refund delays, outright denial of refund claims, a hefty $5,000 civil penalty, and increased IRS scrutiny, such as audits or other enforcement actions.

Beyond Social Media: Fraudulent Credits Target Wealthy Taxpayers

The problem extends beyond social media. Recent federal investigations have uncovered significant schemes targeting wealthy taxpayers, involving companies like White River Energy Corp. and Nepsis selling fictitious “tribal tax credits.” These credits, lacking legal basis, were marketed as deductible, leading to audits, denied claims, and penalties for those misled.

What To Do If You’ve Already Filed

If you suspect you've been misled by a tax scam, the IRS advises acting quickly. File an amended return using Form 1040-X, respond promptly to any IRS correspondence, consult a trusted tax professional, and report suspected scams to [email protected] or through TIGTA.

Stay Ahead of Scammers

The IRS emphasizes a simple rule: avoid taking tax advice from social media. Always verify information with official sources or consult a qualified tax professional. For the latest updates on tax scams, visit the IRS Tax Scams page or follow @IRStaxsecurity on X.

Taxpayers should remain vigilant. Relying on faulty advice found online can lead to severe monetary losses and legal troubles. Always ensure that any tax strategy you consider is supported by legitimate sources and aligns with IRS guidelines.