July 17, 2024

The Internal Revenue Service (IRS) has released a warning for the public about a growing number of tax scams. These scams have made thousands of naive taxpayers submit fraudulent refund claims during the previous tax season. Essentially, deceitful information shared on social media platforms led people to believe they were entitled to profitable tax refunds.

Perpetrators of these scams have advanced from using calls and emails, to using influential people on social media, largely ignorant about tax laws, to trick unsuspecting consumers. Mostly, they’re lured by the promise of substantial refunds.

The Reality Behind Tax Scams

The IRS is determined in making taxpayers aware of scams involving the Fuel Tax Credit, the Sick and Family Leave Credit, and household employment taxes. These scams may sound promising, but they’re mostly wishful thinking:

– **Fuel Tax Credit Scam** – The fuel tax credit is intended for off-highway business and farming usage. Unless you’re a farmer or operating aircrafts, filing for this credit is futile. Despite what a trending social media post suggests, most people aren’t eligible.

– **Sick and Family Leave Credit Misuse** – It was offered to self-employed individuals during 2020 and 2021 due to COVID-19 and is not available for 2023 returns. Misusing Form 7202 to claim it based on the earnings from your regular job could delay your refund and draw unwanted attention from the IRS.

– **Household Employment Taxes** – Some taxpayers falsely claim refunds for wages not paid to fictional household employees. Filing Schedule H (Form 1040) for non-existent workers is perilous.

If You’ve Been Scammed: The Way Forward

In case you’ve been a victim of these scams, there’s no need to fret. The following steps can help you rectify the errors:

– **Verify Eligibility** – Refer to IRS guidelines to determine whether you qualify for the credits you’ve claimed. Consulting a trusted tax expert can help you thoroughly understand your eligibility.

– **File an Amended Return** – If you’ve made a mistake, consider submitting an amended return. You can rectify unauthorized claims using the IRS’s friendly tool entitled “Should I file an amended return?”

– **Respond to IRS Letters** – If your refunds are withheld, the IRS will send you a letter requesting additional details. Ensure to respond promptly and provide the necessary documents for verification. Ignoring these letters may lead to severe consequences, including financial penalties and potential audits.

The cost of recklessly believing information shared on the internet can be quite high. Filing fraudulent claims may result in massive financial penalties, subsequent audits, or even criminal charges. The IRS maintains that many taxpayers have been misled by scam artists and deceptive social media posts, causing them to file false claims. As per IRS Commissioner Danny Werfel, “Taxpayers who filed these claims should realize they’ve been tricked. They face an extensive review process and a long potential wait if they’re owed a refund for other things.”

Avoiding Scams: Stay Informed

Being victim to a scam might seem startling, but here are a few tips to stay secure:

– **Skepticism is Your Best Defense** – It’s crucial not to blindly trust advice shared on social media platforms. Consider referring to the official IRS guidelines or seek advice from a reliable tax expert.

– **Beware of Ghost Preparers** – Be aware of tax preparers who disappear when it’s time to sign the return leaving you in trouble. A preparer unwilling to sign your tax return is a significant red flag.

– **Review Before Filing** – Make sure to review your tax return for accuracy before submission. Check to ensure the credits you’re claiming are legitimate.

Tax scams might resemble fascinating urban legends, but they often lead to issues. The IRS is committed to identifying fraudulent claims, but you must be vigilant. If you’ve filed incorrectly, don’t panic. Amend your return, consult a credible tax professional and avoid sketchy internet advice. By doing so, you can sail smoothly through the tax season and keep mythical tax refunds where they belong: in the internet’s realm of fiction.

For help with any tax problems, reach out to Saunders Tax & Accounting at [www.SaundersTax.com](http://www.SaundersTax.com) or call us at 301-714-2071. We are open from Monday to Thursday, 9 am to 5 pm. As a recipient of the Hagerstown Chamber of Commerce “2023 Small Business of the Year” and Hagerstown Hotlist 2024, we have consistently provided lesser taxing life and more prosperous solutions for 40 years!

FAQs

1. What are the most common tax scams currently ongoing?

The most prevalent scams involve the Fuel Tax Credit, the Sick and Family Leave Credit, and household employment taxes. These scams involve disseminating false information about tax refunds and credits eligibility, duping unsuspecting taxpayers into filing fraudulent claims.

2. What action can I take if I suspect I’ve been a victim of a tax scam?

If you suspect you’ve fallen prey to a tax scam, first verify eligibility for the credits you’ve claimed by referring to the IRS guidelines or consulting a trusted tax professional. If you’ve made a false claim, file an amended return to rectify it. Respond promptly to any letters from the IRS requesting additional details and provide necessary documents to verify claims.

3. How can I avoid falling victim to a tax scam in the future?

To avoid becoming a victim of a tax scam, be skeptical of advice shared on social media platforms. Always cross-verify with official IRS guidelines or consult a reputable tax professional. Additionally, beware of tax preparers who refuse to sign your return and always review your return for accuracy before submitting it.