TikTok tax advice could lead to thousands of delayed refunds and/or audits, IRS warns

IRS warns that following tax advice on TikTok could result in delayed refunds and audits

The Internal Revenue Service (IRS) has issued a warning to taxpayers who relied on tax advice obtained through social media platforms like TikTok. The IRS alert states that thousands of taxpayers have submitted inaccurate refund claims due to misleading advice and tax scams circulating on social media.

The fraudulent advice mainly revolves around three areas: the Fuel Tax Credit, the Sick and Family Leave Credit, and household employment taxes. Taxpayers have been mistakenly inflating their refund claims based on these misleading tips.

The IRS alert emphasizes that these dubious claims can lead to delays in receiving refunds and may require taxpayers to provide legitimate documentation to prove eligibility for the claimed credits. Failure to show eligibility can result in severe financial penalties, as well as follow-up audits and potential criminal action.

The Fuel Tax Credit is specifically intended for off-highway business and farming use, requiring a qualifying business to claim the credit. However, most taxpayers do not meet these criteria. The Sick and Family Leave credits were available only for self-employed individuals in 2020 and 2021, but many people are attempting to claim them even if they are full-time employees.

In light of these issues, the IRS strongly advises taxpayers to avoid falling for these scams and misleading information. The alert aims to dispel myths suggesting that these tactics can lead to substantial refunds.

Ultimately, taxpayers should exercise caution and consult reliable sources, such as IRS guidelines or professional tax advisors, to ensure accurate and lawful tax filings.
The issue of household employment taxes is primarily related to fraud rather than receiving misguided advice. The IRS has identified a trend where certain taxpayers are fabricating household employees and attempting to claim refunds based on false wages that were never actually paid.

According to IRS Commissioner Danny Werfel, these fraudulent claims have been fueled by the spread of misinformation on social media. Scam artists take advantage of people’s desire for a larger refund and exploit the complexity of the tax system by convincing them that there are secret methods to obtain a substantial refund. To avoid falling victim to these scams, Werfel emphasizes the importance of carefully reviewing tax returns for accuracy and seeking advice from trusted tax professionals rather than relying on unreliable preparers or questionable sources on social media.

Taxpayers whose refunds have been frozen due to these fraudulent claims will receive letters from the IRS requesting additional information. If they are unable to provide the necessary documentation, they may need to amend their tax returns.