Have you seen some too good to be true ads online or on social media, promising huge tax breaks or massive refunds simply because you missed work due to COVID-19? If so, you may be a target for a social media tax scheme. Social media schemes are often advertised as ways to legally reduce your taxes.
Reducing your tax liability may be tempting; however, many social media schemes are illegal and can lead to serious consequences.
What is a Social Media Scheme?
Inaccurate or misleading tax information is easy to circulate on social media, and the IRS has recently seen several examples of how bad actors are targeting taxpayers via social media channels. Fraudulent form filing and bad advice on social media are part of the 2023 IRS annual Dirty Dozen campaign – a list of 12 scams and schemes involving topics such as offering help creating online accounts, donating to fake charities, and claiming refunds and credits such as the Employee Retention Credit, that put taxpayers and the tax professional community at risk of losing money, personal information, data, and more.
Common types of social media schemes involve:
- Inaccurate or misleading tax advice; and
- Requesting taxpayers to send personal information to unverified sources on social media.
These sources may claim to be tax professionals, but they are not qualified to give tax advice. Unqualified tax return preparers may not follow ethical standards and may engage in fraudulent activities.
To help avoid falling prey to social media schemes, look for a preparer who has a valid Preparer Tax Identification Number and is authorized to practice before the IRS. You can also check their credentials, experience, and any reviews or complaints before hiring them. For more tips on how to select a trusted tax professional visit our Get Help page, Choosing a Tax Return Preparer.
TAS urges you to be wary of any scheme that promises to reduce your taxes significantly. Before claiming a credit or deduction that you aren’t sure you are entitled to, be sure to do your research and seek advice from a qualified tax professional. Remember, if something seems too good to be true, it probably is. If you are unsure about the legality of a particular credit or deduction, contact the IRS or a qualified tax professional for guidance. You can also get good tax information from tax return software and IRS.gov. By staying informed and vigilant you can protect yourself from the dangers of fraudulent credits or deductions and ensure your financial stability for years to come.
