June 15, 2024

![IRS image](https://investmentshoax.com/wp-content/uploads/2024/05/12668017-internal-revenue-service-irs.png)

The IRS has recently issued an alert to taxpayers amid a wave of tax scams and misleading advice on social media. These deceptions have resulted in numerous taxpayers wrongly filing exaggerated refund claims.

The implausible claims focus on the Fuel Tax Credit, the Sick and Family Leave Credit, and Household Employment taxes. Many taxpayers have presented doubtful claims, applying credits for which they aren’t eligible. This has caused a delay in refunds and, in some cases, a requirement for taxpayers to provide substantial documentation to back their claims.

Continued warnings from the IRS urge taxpayers to avoid these deceptions, despite persistent social media rumors of obtaining vast refunds through these ways. Highlighted in the IRS’ annual [Dirty Dozen](https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMjYsInVyaSI6ImJwMjpjbGljayIsInVybCI6Imh0dHBzOi8vd3d3Lmlycy5nb3YvbmV3c3Jvb20vZGlydHktZG96ZW4iLCJidWxsZXRpbl9pZCI6IjIwMjQwNTE0Ljk0NzY0ODMxIn0.FlVACfhghO3P82O5kPeR_Qc8NpztuBdOFch6Wfhsnzo/s/1405128129/br/242391990237-l) series were these types of scams, including deceiving social media advice and so-called [“ghost preparers”](https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMjksInVyaSI6ImJwMjpjbGljayIsInVybCI6Imh0dHBzOi8vd3d3Lmlycy5nb3YvbmV3c3Jvb20vZGlydHktZG96ZW4taXJzLXVyZ2VzLXRheHBheWVycy10by1ub3QtZmFsbC1wcmV5LXRvLXVudHJ1c3R3b3J0aHktdGF4LXByZXBhcmVycy1naG9zdC1wcmVwYXJlcnMtY2FuLWRpc2FwcGVhci13aXRoLXRheHBheWVyLWNhc2gtaW5mb3JtYXRpb24iLCJidWxsZXRpbl9pZCI6IjIwMjQwNTE0Ljk0NzY0ODMxIn0.eVo3tAxoJVg335zHqpTcFQB_N5nnWCPbe9UOMxHu-hs/s/1405128129/br/242391990237-l).

Taxpayers who’ve been led into these scams should take steps to prove their own claim eligibility. If they don’t, they could face harsh financial penalties and possible criminal action for inappropriate claims. The IRS urges taxpayers to refer to clear guidelines, seek advice from reputable tax preparers, and possibly file an amended return to correct any ineligible claims.

IRS Commissioner Danny Werfel warned about scam artists and misleading social media posts that have led well-meaning taxpayers to falsely believe they can claim substantial refunds. These false claims are usually detected during IRS fraud reviews. If taxpayers have filed such claims inadvertently, they should understand they’ve been scammed and will have to undergo an in-depth review process and a potentially long wait if they’re due a refund for other reasons.

Issue claims involve Fuel Tax Credit, Sick and Family Leave Credit, Household Employment taxes

Several common themes have reoccurred in these fraudulent refund claims. They usually involve valid tax provisions but apply to highly specific situations. The majority of these claims are not qualified:

– **Fuel Tax Credit**: This particular credit is intended for off-road business and farming operations. Taxpayers must have a legitimate business purpose and a qualifying business activity to be eligible for the credit. Most taxpayers don’t qualify for this credit.

– **Credits for Sick Leave and Family Leave**: This specific credit is available only for self-employed individuals for 2020 and 2021 during the pandemic and is not available for 2023 tax returns. The IRS has noticed frequent misuse of [Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals](https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzAsInVyaSI6ImJpMjpjbGljayIsImlzcyI6InVhIiwic3ViIjoiZW1haWxjbGljayIsImF1ZCI6InVjIiwidXJsIjpbXX0.GehZZoTw7Lm-jSkuD95HzBVCqq6kinjZf1vn9yXuVNw/s/1405155334/br/242391990237-l) to wrongfully claim a credit based on income earned as an employee and not as a self-employed individual.

– **Household Employment taxes**: Some taxpayers deceitfully create fictional household employees and then file [Schedule H (Form 1040), Household Employment Taxes](https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzEsInVyaSI6ImJpMjpjbGljayIsImlzcyI6InVhIiwic3ViIjoiZW1haWxjbGljayIsImF1ZCI6InVjIiwidXJsIjpbXX0.oqDqq7XUxVypuCWgrhc7V2mqYuNterKIvihCjVyTlgM/s/1405155334/br/242391990237-l) to claim a refund based on false sick and family medical leave wages that were never paid.

Possibly deceitful refunds frozen; inappropriate claims may face subsequent compliance action

Because of the suspicious nature of many of these claims, the IRS has suspended refunds for these taxpayers. To solve these issues, taxpayers must follow several specific steps.

Taxpayers housed under frozen refunds will typically receive letters from the IRS requesting further information. These may request them to verify their identity.

Common Questions

What can I do if I have fallen for these tax scams?

First, don’t panic. Contact a trusted tax advisor to assess your situation and guide you on the next steps. In some cases, you may have to file an amended return to remove any ineligible claims and avoid penalties.

How can I ensure the credits I am claiming are eligible?

Thoroughly read the IRS guidelines pertaining to the credit, or seek advice from a trustworthy tax professional. Remember, if a credit seems too good to be true, it probably is.

What happens if my refund has been frozen?

If your refund has been frozen, you will likely receive a letter from the IRS asking for additional information or for you to verify your identity. In such cases, follow the instructions outlined in the letter or seek advice from a tax professional.In such situations, if you’ve filed the return in question, it’s worth taking a second look to ensure their tax return is error-free. The main point is to verify whether you genuinely qualify for any of the three credits stated before. Also, if a tax preparer was used, it’s vital to confirm that they have actually signed the tax return. The absence of a preparer’s signature can be a warning signal that something might be off.

If these credits were falsely claimed, you do not need to physically go to a Taxpayer Assistance Center (TAC) to verify your identity. However, it might be necessary to revise your tax return in order to remove the wrongly claimed credit. The IRS.gov tool
[Should I File an Amended Return?](https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzIsInVyaSI6ImJwMjpjbGljayIsInVybCI6Imh0dHBzOi8vd3d3Lmlycy5nb3YvaGVscC9pdGEvc2hvdWxkLWktZmlsZS1hbi1hbWVuZGVkLXJldHVybiIsImJ1bGxldGluX2lkIjoiMjAyNDA1MTQuOTQ3NjQ4MzEifQ.YL9qNCq0UD-R2OdfkcJ1K0EtoriRiMegk0kvsV86OYs/s/1405128129/br/242391990237-l) can be used to find out if you need to [amend](https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzMsInVyaSI6ImJwMjpjbGljayIsInVybCI6Imh0dHBzOi8vd3d3Lmlycy5nb3YvZmlsaW5nL2ZpbGUtYW4tYW1lbmRlZC1yZXR1cm4iLCJidWxsZXRpbl9pZCI6IjIwMjQwNTE0Ljk0NzY0ODMxIn0.1CKTwmhzUm3BVHeVxAauOB6UURB_aLFo_ZERKS3e-rQ/s/1405128129/br/242391990237-l) your return. If an amended return is submitted, there is no need to visit a TAC.

Taxpayers who initially received correspondence questioning their identity may receive additional letters requesting proof that they qualify for the credits they’ve claimed. If you receive such letters, be sure to follow the advice given in the most recent letter.

Be aware that the IRS Notice 3176c pertains to potentially frivolous tax returns, which can include incorrect claims for Fuel Tax Credits, Sick and Family Leave Credits, and Household Employment taxes.

If legitimate taxpayers can provide evidence to back up their claims for these credits. However, a penalty of up to $5,000 per return awaits those who falsely claim these credits. Filing a false tax return knowingly could also potentially lead to criminal prosecution.

To avoid penalties and further action from the IRS, correct your tax returns promptly by removing these claims. The IRS.gov tool [Should I File an Amended Return?](https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzQsInVyaSI6ImJwMjpjbGljayIsInVybCI6Imh0dHBzOi8vd3d3Lmlycy5nb3YvaGVscC9pdGEvc2hvdWxkLWktZmlsZS1hbi1hbWVuZGVkLXJldHVybiIsImJ1bGxldGluX2lkIjoiMjAyNDA1MTQuOTQ3NjQ4MzEifQ.TsgIYX_V6pNaPOdkSO_ZE0ERtSsPDrMIj5TcpgsRSPE/s/1405128129/br/242391990237-l) can guide you in finding out if you need to [amend](https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzUsInVyaSI6ImJwMjpjbGljayIsInVybCI6Imh0dHBzOi8vd3d3Lmlycy5nb3YvZmlsaW5nL2ZpbGUtYW4tYW1lbmRlZC1yZXR1cm4iLCJidWxsZXRpbl9pZCI6IjIwMjQwNTE0Ljk0NzY0ODMxIn0.khtfvsrgHdLbJ_hoU8a7afS88TeN9YGwuitLb9GztKM/s/1405128129/br/242391990237-l) your return. There is no need to visit an IRS Taxpayer Assistance Center if an amended return is submitted. In such situations, you can also seek advice from a [trusted tax professional](https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMzYsInVyaSI6ImJwMjpjbGljayIsInVybCI6Imh0dHBzOi8vd3d3Lmlycy5nb3YvdGF4LXByb2Zlc3Npb25hbHMvY2hvb3NpbmctYS10YXgtcHJvZmVzc2lvbmFsIiwiYnVsbGV0aW5faWQiOiIyMDI0MDUxNC45NDc2NDgzMSJ9.4pjssplPqiYFfYiSnDq-LyGNWXIXgDuEBeEV_lBP09k/s/1405128129/br/242391990237-l).

Kindly note that the entire refund amount is frozen on returns with these bad claims. Thus, taxpayers will not receive any part of their refund, even if they’ve claimed legitimate credits.

## FAQ
### How can I amend my tax return?
If the taxpayer needs to correct mistakes in their tax return, this can be achieved through the submitting an amended return. A link has been attached to guide you in the filing process.
### What happens if I claim a credit I do not qualify for?
The claiming of credits you do not qualify for could lead to serious consequences including a fine up to $5000 per frivolous claim. In some cases, it might lead to criminal prosecution.
### What should I do when I receive a letter from the IRS requesting additional documentation?
When you receive a letter from the IRS asking for more documentation, follow the instructions given in the most recent letter. It’s very important to respond promptly and accurately to ensure a smooth resolution of your case.