Debunking Social Media Tax Advice

In today’s scrolling culture, social media makes it easy for scammers to provide misleading information to taxpayers seeking ways to increase their deductions and refunds. These platforms are popular sources of information on topics ranging from cooking and home repairs to, unfortunately, financial advice. While the content may seem legitimate, it is important to know that not everything you read on social media or online is true. Falling victim to these scams not only puts you at risk, but it could also lead to costly consequences.

According to the IRS’s 2024 Dirty Dozen Campaign, social media scams continue to be on the rise. These scams have led thousands of taxpayers to file inaccurate returns, often resulting in the denial of refunds and steep penalties. Since 2022, the IRS has imposed over 32,000 penalties, costing taxpayers more than $162 million. Under Internal Revenue Code Section 6702, the civil penalty for filing a frivolous return is $5,000.

Here are key takeaways to help you recognize and avoid the next trending tax scheme:

Does the Topic Claim That Everyone Qualifies for the Deduction or Credit?

Tax laws are intricate, complex and are rarely short. Social media’s short-form content leaves little room for the full details required with tax advice. Tax situations are often taxpayer-specific, meaning many factors need to be considered, such as state of residency, structure of the business, income sources, etc. Be wary of tactics that may seem too good to be true because they probably are.

Is the Information Being Provided by a Licensed Professional?

Social media posts are designed to grab your attention. Many posts falsely claim that all taxpayers qualify for certain credits and deductions. The influencer posting the content is not liable for any inaccurate claims you file with the IRS and will not assist you with IRS disputes regarding your claim. If you come across content that you want to know more about, get a second opinion from a true professional. Seek out the advice of a licensed CPA or qualified tax professional who not only has actual experience but also adheres to professional ethics and rules.

What Should You Do if You Have Fallen Victim to One of These Scams?

If you discover that you acted on false information, amend your tax return as soon as possible to reflect the proper tax position. Prompt action once you are made aware of the scam could prevent civil penalties related to frivolous tax positions. Key steps include:

• • Responding promptly to any written correspondence that you receive from the IRS.
  • Consulting a professional authorized practice before the IRS, such as a CPA, enrolled agent or tax attorney.

The IRS remains vigilant against abusive transactions and schemes, and taxpayers are encouraged to do the same. Always remain cautious when receiving new tax advice from questionable sources. If you have any questions or need guidance, please reach out to us, the tax professionals at Dannible and McKee, LLP.

 

Contributing author: Kaitlyn L. Mariano, CPA, is a tax partner at Dannible & McKee. Kaitlyn has over 13 years of experience overseeing tax engagements for a variety of clients with a focus on manufacturing, construction and high-net-worth individuals. For more information on this topic, contact Kaitlyn at kmariano@dmcpas.com or (315) 472-9127.