The IRS has dished out more than $162 million in penalties to taxpayers who have fallen for fraudulent tax schemes circulating on social media that promote the misuse of certain tax credits, the agency said on Monday.
As a result, thousands of taxpayers have filed inaccurate or frivolous returns that falsely claim the Fuel Tax Credit and the Sick and Family Leave Credit, often resulting in the denial of refunds and steep penalties, the IRS stated.
Since 2022, the agency 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 that all taxpayers are eligible for credits they don’t actually qualify for, such as those meant for self-employed individuals or businesses.
The IRS routinely publishes and updates a list of frivolous positions on IRS.gov that could lead to the imposition of penalties.
“These schemes are not only misleading but can cost taxpayers dearly,” James Clifford, IRS director of return integrity and compliance services, said in a statement on Sept. 8. “People who follow this advice could end up with rejected claims and a penalty of up to $5,000 in addition to any other penalties that might apply. So far, the IRS has imposed over 32,000 penalties costing taxpayers more than $162 million. It’s in the taxpayer’s best interest to stay informed.”
According to the IRS, these scams often have common traits:
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