IRS finds tax misinformation promoted by social media claims has cost taxpayers $162m in penalties

The Internal Revenue Service (IRS) on Monday announced that social media posts riddled with misinformation about taxes have cost Americans $162 million in penalties since 2022.

The IRS said it has seen a rise in two schemes in particular since 2022: The Fuel Tax Credit and the Sick and Family Leave Credit. The Fuel Tax Credit was designed for farming uses and the latter was for self-employed workers during the COVID-19 pandemic in 2020 and 2021, but not after, Nexstar reported.

The service said the scams have led Americans to file inaccurate or "frivolous" tax returns that result in steep fines or a denial of refunds.

“These schemes are not only misleading but can cost taxpayers dearly,” James Clifford, IRS Director Return Integrity and Compliance Services, said in a statement. “People who follow this advice could end up with rejected claims and a penalty of up to $5,000 in addition to any other penalties that might apply. 

"So far, the IRS has imposed over 32,000 penalties costing taxpayers more than $162 million. It’s in the taxpayer’s best interest to stay informed," he added.

The IRS provided tips for how taxpayers can spot the scams, such as posts that claim "everyone" qualifies for the credit and promises “easy” or “fast" refunds with limited documentation.

In its announcement Monday, the IRS recommends that if a taxpayer believes they fell for a scam, they should amend the tax return as soon as possible, seek help from a reputable tax professional or IRS employee and respond promptly to any IRS letters or notices. 

Misty Severi is a news reporter for Just The News. You can follow her on X for more coverage.