Each year the IRS educates taxpayers on the most trending fraud schemes that could deceive individuals and businesses during tax season. In late 2024, The IRS took to warning the public against misleading “tips” or fraudulent “advice” being widely distributed via social media platforms.
They are back once again, this time alerting taxpayers that over $162 million in penalties have been imposed due to fraudulent or frivolous tax returns as a result of bad actors online.
Warning from the IRS: Be Cautious of Social Media Tax Claims
Since 2022, the IRS has seen an uptick in false refund claims, especially with the Sick and Family Leave Credit as well as the Fuel Tax Credit. Now that there is a new tax law in play, taxpayers are urged to be even more cautious around the new information circulating online. Whether or not a taxpayer is intentionally deceiving the IRS with unqualified refund claims, they are still responsible for the accuracy of their tax return and, as a result, can be subject to penalties up to $5,000.
How to Safely Engage in Social Media
Not every tax video online is bad or at fault. Due your due diligence and follow up on the advice being presented. Also make sure to gauge the credentials and credibility of the speaker or influencer. If a tip sounds too good to be true, it likely is.
Keep these tips in mind:
- Taxes are complex. The information could be factual, but tax planning is very situational. Just because the advice applies to one individual or business, does not mean it’s eligible or applicable to everyone. Consult with your
- Consider the source and beware of promissory statements and guarantees. If you follow financial “professionals” in your video feed, know that FINRA and the SIPC have many restrictions for licensed professionals. Most are not even allowed to provide advice on social media, and they definitely cannot make performance guarantees. So, is the source actually a professional?
Signs of a Viral Tax Scam on Social Media
- Influencer posts or videos claiming “everyone qualifies” for certain tax credits.
- Promises of an “easy” or “fast” tax refund with little to no documentation required.
- Instructions to file amended tax returns, even if you *did not* originally qualify.
- Encouragement to ignore IRS letters or respond with false information.
Repercussions of Falling For a Scam (whether intentional or not)
- Delayed and/or denied refunds.
- Up to $5,000 in civil penalties for filing a frivolous or fraudulent tax return.
- Increased risk of IRS audits, examinations, and enforcement action.
What Should Taxpayers Do if they are a Scam/Fraud Victim?
- Amend the tax return in question as soon as possible using Form 1040-X.
- Respond quickly to any IRS letters or notices.
- Seek help from a reputable tax professional or the IRS’s resources at IRS.gov.
- Report a suspected scam to phishing@irs.gov or file a complaint with the Treasury.
How can I protect myself online going forward?
- The IRS urges taxpayers to be cautious when relying on social media posts.
- Always verify claims with credible sources or consult a qualified tax professional.
- Never click on suspicious links, unknown SMS/text links, or overshare your personal information online.
- Follow Alloy Silverstein’s Tax Fact or Tax Crap video series for actual up-to-date and trending tax tips.
YouTube Series: Tax Fact or Tax Crap
Alloy Silverstein Associate Partner Ren Cicalese III, CPA, MST began an informative video series inspired by this exact topic—misleading tax advice on social media. These quick videos address trending tax “tips,” hacks, and myths and unveil a real answer from a knowledgeable tax professional. View the various videos below and subscribe to Alloy Silverstein’s YouTube Channel to see the latest video as it’s published. Tax Fact or Tax Crap videos are also posted on Alloy Silverstein’s social media accounts.
Topics addressed so far — Are they tax fact or tax crap?
- I’m a full-time student, so I don’t have to pay taxes on my income.
- You can hire your kids to work for you and save on taxes.
- I have a side business, but it doesn’t make a lot of money, so I don’t have to worry about it on my tax return.
- As a sole proprietor, I don’t have to pay Social Security Medicare taxes since I’m not an employee.
- Cryptocurrency does not affect my tax return.
- An tax return extension is also an extension of time you have to pay.
- If you lose money while gambling, you can take that loss on your tax return.
- I’ve put company branding on my vehicle so I can write off the cost of my car.
- I’m in classes to learn about owning a business, the tuition is deductible.
- You can pick any tax filing status that you want when filing your tax return.
- The IRS will call you requesting payment of taxes owed.
- Gifts are not taxable income.
- The IRS doesn’t care about my cryptocurrency holdings.
- You can take a deduction for working from home.
- The IRS has plans to increase income tax return audits.
- You can claim a tax credit for contributions to a retirement plan.
- You can get a tax credit for any foreign taxes paid on your income.
- Your tax filing status doesn’t impact your tax return at all.
