Social media might be useful for fashion fads or fitness fanatics. But for tax hacks? Not so much.
There’s been a surge in sketchy refund claims since 2022, mostly fueled by social media posts. That’s led to the IRS levying $162 million in penalties on taxpayers who’ve tried to claim those credits.
A year ago, the IRS posted an FAQ to try to warn about the scams. Most scams have centered around tax breaks like the Fuel Tax Credit (meant for off-highway business, farming, aviation, and commercial fishing use) and the Sick and Family Leave Credit (meant for small and mid-sized employers during the pandemic).
Spot the Social Media Scam
These bogus tax hacks follow a familiar pattern, usually:
- Claiming everyone qualifies for certain tax credits.
- Promising “easy” or “fast” refunds with minimal documentation.
- Including instructions to file amended returns, even if you didn’t originally qualify for the credits.
- Encouraging taxpayers to disregard IRS letters or to respond with false information.
Reaping the Repercussions
Taxpayers who try to game the system face an unpleasant list of potential consequences, including:
- Delayed refunds
- Denied refund claims
- A $5,000 penalty
- Additional IRS examination and enforcement action
Taking Targeted Actions
Taxpayers who’ve fallen for the bad advice or filed a questionable return should:
- Amend the tax return as soon as possible using Form 1040-X, Amended U.S. Individual Income Tax Return.
- Respond promptly to any IRS correspondence.
- Seek help from a reputable tax pro or the IRS’s official resources at IRS.gov.
You can also report a scam by emailing the IRS or filing a complaint with the Treasury Inspector General for Tax Administration.
If you think you’ve been had by a social media scam, we can help.