The IRS is warning taxpayers about a rise in fraudulent tax schemes spreading on social media, particularly those misusing credits like the Fuel Tax Credit and the Sick and Family Leave Credit. These scams have prompted thousands of people to file inaccurate or frivolous returns, often leading to denied refunds and hefty penalties. Since 2022, the agency has seen a sharp increase in questionable refund claims fueled by misleading online posts and individuals posing as tax experts.
Many of these posts falsely suggest that all taxpayers qualify for credits intended only for specific groups, such as businesses or self-employed workers. To help protect taxpayers, the IRS regularly updates a list of frivolous tax positions on IRS.gov that can trigger penalties. “These schemes are not only deceptive but also financially harmful,” said James Clifford, Director of IRS Return Integrity and Compliance Services. “Following this bad advice could result in rejected claims and penalties of up to $5,000, on top of other consequences.” To date, the IRS has issued over 32,000 penalties totaling more than $162 million.