I saw this recently: Did you know that the internet is estimated to be something like 50% duplicated content? 

Which means if one false thing is put out there – that seems convincing enough – chances are good that it’ll be duplicated into oblivion. So if JUST ONE bad actor is putting out false tax information, you will likely come across it and so will your Columbia, SC friends too. Especially in the social media echo chamber world. 

The crazy thing is, the content can seem pretty convincing, and I’ve seen it obviously. When an “armchair expert” pops up in your feed trying to convince you that there’s this secret tax hack to get you a bigger refund, or this overlooked credit that you can still take that means lots of moolah in your pocket … SCROLL ON. The whole goal of that video is to hook you into their channel and their product, and it can get you in trouble.

To be fair, there are still some actually qualified people with valid expertise on these channels. Even I’ve got a Facebook business page where I give insights on a slew of tax-related topics: https://www.facebook.com/rejoice.tax. But just because someone has a following and semi-decent video skills doesn’t mean they’re qualified to advise you on the subject.

Which is why the IRS is having to issue statements about tax scams on social media. Here are the top four circulating the feeds right now…

4 Tax Scams on Social Media Columbia, SC Taxpayers Shouldn’t Believe

“A lie can travel halfway around the world while the truth is putting on its shoes.” — Mark Twain

There are plenty of bad actors out there looking to offer you “advice” that’ll land you on the IRS’s “check twice” list. In fact, the IRS recently issued a warning about several scams on social media that led to inflated refund claims last tax season. Though we’re in between tax seasons, I’m still hearing about these situations. So let’s take today to look at the big tax scams on social media to keep scrolling past.

#1 – Fuel Tax Credit Scam

What’s the deal? The Fuel Tax Credit is one that’s meant for off-highway business uses like farming or commercial fishing. Most regular taxpayers aren’t eligible for this.

The scam: Scammers advise viewers to use Form 4136 incorrectly, making it look like you’re eligible for the credit when you’re not. They suggest that anyone can claim this credit, regardless of their actual eligibility. They may even go as far as suggesting fabricated or exaggerated fuel receipts to support the claim. 

Consequence: Filing a false claim can lead to significant trouble with the IRS, including penalties of up to 5K per frivolous claim, audits, and even criminal charges.

#2 — Sick and Family Leave Credit for Self-Employed Individuals

What’s it about? This credit was available during 2020 and 2021 for self-employed people who couldn’t work due to the pandemic.

The scam: Some are being encouraged to mistakenly or fraudulently claim this credit beyond its original parameters or based on employee income instead of self-employed income. To be clear, this credit is no longer available.

Consequences: Incorrectly claiming this credit can lead to audits and penalties. The IRS might hold your refund and request documentation to prove your eligibility.

#3 — Overstated Withholding Scam

What’s happening? This involves creating fake W-2 or 1099 forms with exaggerated income and withholding amounts to get a bigger refund.

The scam: Scammers encourage viewers to fabricate or inflate their income and withholding amounts on tax forms or even go as far as creating fake W-2s or 1099s. They may even encourage you to invent a fictional employer to match the fake forms.

Consequences: The IRS verifies all withholding claims. If they can’t match your information with legitimate employer records, they’ll hold your refund and investigate, which could lead to fines and serious legal issues.

# 4 — Household Employment Taxes Scam

What’s the issue? This involves inventing fake household employees to claim refunds based on wages that were never paid.

The scam: Scammers tell you to make up household employees and claim wages for them on Schedule H (Form 1040). They advise claiming sick and family leave wages that you never actually paid.

Consequences: Filing false claims can lead to severe penalties, including fines and potential criminal prosecution. The IRS will hold your refund and require proof of these wages.

The IRS is onto these tricks and has increased their scrutiny, so don’t be surprised if you get a letter asking for more info if something looks fishy.

If the IRS thinks there’s an issue with your return, they might send you a letter like:

  • Letter 5747C or 4883C/5071C. These letters ask you to verify your identity and tax return information.
  • Letter 3176C. This indicates your claim might be frivolous. Follow the instructions exactly and disregard any earlier letters you’ve received.

If you get one of these letters, follow the instructions carefully. Provide any requested documentation as soon as possible. 

 

Staying informed and cautious is your best defense against scams on social media. Always verify your information and consult with a trusted Richland County professional. I’m here if you need me to help you sniff out anything or verify what you’ve seen while scrolling your Instagram feed:
calendly.com/rejoicetax

Keeping you informed,
Akuathayre Snell