(NEXSTAR) – The self-described tax experts of TikTok and other social media sites have cost American's $162 million in penalties since 2022, the IRS said in a news release Monday.
Advice on the most important decisions of our lives – from our health to our finances – has never been easier to share or more entertaining, but experts say there is a shocking amount of misinformation.
"Every year the misleading tax advice given on social media changes, but there are common threads that taxpayers can begin to recognize: it sounds too good to be true, it will save you thousands in tax or result in you receiving a substantially larger refund, and only the person giving the advice is in on the secret," Adam Brewer, tax attorney with AB Tax Law, told Nexstar in an email.
The IRS is warning of two schemes in particular that have been circulating recently, promoting the misuse of two credits: the Fuel Tax Credit and the Sick and Family Leave Credit.
Frozen vegetables recalled in multiple states over contamination fearsThe Fuel Tax Credit was created largely for farming use and "off-highway business" and isn't applicable for most taxpayers, according to the IRS, contrary to what the social media "experts" advise.
The latter was a pandemic-era credit for self-employed people for the years 2020 and 2021, but is not available for later years. The IRS says it is seeing "repeated instances" of taxpayers claiming Form 7202, even on income earned as an employee and not as a self-employed person.
"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," the release states."
The IRS urges taxpayers to beware of the following: posts that claim everyone qualifies for certain credits, promises of "easy or "fast" refunds with minimal documentation, instructions to file amended returns and encouragement to ignore IRS letters or reply with false information.
"If the tax advice you are getting from social media sounds too good to be true, then reach out to an experienced tax professional like a CPA or tax attorney to double and triple check it," Brewer said. "It could save you a big headache in the long run."
Penalties can include delayed refunds, denied claims, a $5,000 civil penalty and further IRS investigation.
Taxpayers who were duped with incorrect information are encouraged to amend their tax returns immediately, respond to IRS letters and hire a reputable tax professional.
Source: The Hill - News
