The IRS is alerting taxpayers about fraudulent tax schemes circulating on social media that promote the misuse of certain business tax credits, such as the Fuel Tax Credit.
Since federal taxes on fuel are used to fund highway maintenance, businesses that purchase fuel for farming, landscaping or other off-highway use can apply for the tax credit. Although most taxpayers do not qualify for the tax credit, scammers still encourage them to file for it.
“These schemes are not only misleading but can cost taxpayers dearly,” said James Clifford, IRS Director of Return Integrity and Compliance Services.
The IRS has imposed over 32,000 penalties related to tax scams that have cost taxpayers over $162 million, he said.
Since 2022, the IRS has seen a surge in questionable refund claims fueled by misleading social media posts and bad actors posing as tax experts. Many of the posts falsely claim all taxpayers are eligible for credits they do not actually qualify for, such as those meant for self-employed individuals or businesses.
The Sick and Family Leave Credit, which expired Sept. 30, 2021, is another frequent scheme circulating on social media. The temporary payroll tax benefit was created during the COVID-19 pandemic to help small to mid-size employers cover the cost of providing paid leave to employees affected by the virus.
Nevertheless, scammers on social media continue to urge even W-2 employees to file Form 7202, which was for self-employed individuals, and claim the expired tax credit.
Taxpayers who submit false claims may face serious consequences including delayed or denied refunds, a $5,000 penalty for filing a frivolous return, and the possibiity of further IRS enforcement action. The IRS urges all taxpayers to be cautious when relying on social media posts and to verify claims with credible sources or consult a qualified tax professional.
For the latest updates on tax scams and IRS warnings, visit Tax Scams.
