Every tax season, business owners and professionals search for ways to reduce their tax bills. As a result, a troubling trend has emerged online: fraudulent tax schemes spreading through social media. These scams lure people with claims of quick, guaranteed refunds, often tied to credits that you are likely not eligible to claim.
Since 2022, the IRS has imposed more than 32,000 penalties, costing those affected over $162 million. For many, what seemed like a shortcut to a bigger refund ended in steep fines and the possibility of further IRS scrutiny.
Here’s what you need to know about how these scams work, what red flags to look for, and how to protect yourself.
Social Media and the Rise of Tax Scams
The digital world has made it easier than ever for misinformation to spread. Posing as tax experts, bad actors on platforms like TikTok and Facebook encourage taxpayers to claim credits designed for particular groups. Two of the most commonly misused credits are:
The Fuel Tax Credit: intended for businesses that use fuel off-highway, such as farming or construction, not for individual taxpayers filing personal returns.
The Sick and Family Leave Credit: available in limited circumstances for self-employed individuals or businesses, but not for the majority of employees.
By mixing legitimate tax terms with false promises, these posts create a convincing illusion. The result is taxpayers filing returns that look suspicious to the IRS and, ultimately, trigger penalties.
How to Recognize a Tax Scam
Tax schemes often share common characteristics. According to the IRS, watch for these red flags:
- Claims that “everyone” qualifies for certain tax credits.
- Offers of fast or guaranteed refunds with minimal paperwork.
- Directions to file amended returns even when you did not initially qualify.
- Advice to ignore IRS correspondence or provide misleading information in response.
These tactics rely on urgency and the appeal of quick money. If a claim seems unusually broad or promises an effortless refund, it should be treated with caution.
The Real Consequences of Following Bad Social Media Tax Advice
Falling for one of these scams can do far more harm than good. Consequences include:
- Reduce delays or outright denials.
- A civil penalty of up to $5,000 under Internal Revenue Code Section 6702 for filing a frivolous return.
- Further IRS examination, audits, or enforcement actions.
Steps to Take if You’ve Been Misled
If you suspect you may have been caught up in one of these schemes, it is crucial to act quickly:
- Amend your return using Form 1040-X, Amended U.S. Individual Income Tax Return.
- Respond to all IRS correspondence promptly and honestly.
- Seek professional guidance from a qualified CPA and tax strategist who can help correct errors.
- Repost suspected scams to the IRS at phishing@irs.gov
Taking these steps early can help minimize penalties and clear up mistakes before they escalate.
Why Working With a Trusted Professional Matters
Tax law is complex, and credits are often narrowly defined. What looks like a simple opportunity on social media can turn into a financial setback if the information is inaccurate. This is where working with an experienced professional makes a significant difference.
At Tax Goddess, we specialize in guiding business owners through complex tax rate rules. Our Strategic Tax Coaching program helps clients reduce taxes legally and safely, ensuring that every credit or deduction taken is legitimate. Over the past two decades, we have saved clients more than $2 BILLION, without shortcuts or risks that could invite penalties.
Instead of gambling with advice from unverified sources, you can rely on proven strategies that both reduce your tax burden and keep you fully compliant.
Bottom Line
The IRS crackdown on fraudulent tax schemes is a reminder that shortcuts rarely pay off when it comes to taxes. Social can be a great source of entertainment, but it is not the place to make decisions about your tax return.
By recognizing the warning signs, avoiding suspicious claims, and working with trusted professionals, you can protect both your refund and your peace of mind.
The safest path is also the smartest: stay informed, stay compliant, and make sure your tax strategy works in your favor, not against you.
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