IRS Warns of Misleading Tax Advice Flood on Social Media

The Internal Revenue Service (IRS) issued a warning about the proliferation of inaccurate or misleading tax information on social media platforms, cautioning taxpayers to be vigilant against schemes that could lead to identity theft and tax problems. This alert comes as part of the IRS's annual Dirty Dozen campaign, aimed at raising awareness about common tax scams and schemes.

Social media platforms, including TikTok, have become breeding grounds for fraudulent tax advice, with individuals sharing misleading information that could potentially harm unsuspecting taxpayers. One prevalent tactic involves encouraging people to misuse common tax documents such as Form W-2 or more obscure ones like Form 8944, leading them to submit false information in hopes of receiving a larger tax refund.

"If you send in a tax return that has W2 information that includes withholding, the IRS will process that pretty quickly, in advance of that matching process. The people who do [falsify information] will ultimately get caught," explained Keith Hall, a CPA and CEO of the National Association for the Self-Employed.

IRS Commissioner Danny Werfel emphasized the dangers of relying on social media for tax advice, stating, "Social media is an easy way for scammers and others to try encouraging people to pursue some really bad ideas." 

The IRS's warning against misleading tax advice on social media comes with the eighth installment of the Dirty Dozen campaign for the year 2024. This initiative aims to educate taxpayers and tax professionals about prevalent tax scams that put them at risk of financial loss and identity theft.

Despite efforts to combat fraudulent tax schemes, the IRS acknowledges the ongoing challenges posed by misinformation. "There are all these individuals [on social media] purporting to be tax experts, but they are really scamming attention by showing these tax hacks," said Amir Tarighat, CEO of cybersecurity company Agency.

Furthermore, misinformation about Form 8944 has led some individuals to believe they can receive refunds from the IRS, even if they owe taxes. The institution has intensified its crackdown on wealthy tax cheats by sending over 125,000 compliance letters to high-income taxpayers who have failed to file returns since 2017.

These letters target cases collectively representing hundreds of millions of dollars in unpaid taxes, with more than 25,000 directed at individuals with incomes exceeding $1 million.

Werfel emphasized the importance of addressing non-compliance among high-income earners, characterizing failure to file tax returns as a form of tax evasion. "By targeting delinquent taxpayers with high incomes, the IRS aims to recover unpaid taxes and deter future tax evasion schemes. Taxpayers who knowingly file fraudulent tax returns face severe consequences, including significant civil and criminal penalties," he said.

"[T]here is no secret way to get free money or a big refund," said IRS Acting IRS Commissioner Doug O'Donnell in a statement. "People should not make up income and try to submit a fraudulent tax return in hopes of getting a huge refund."