IRS alerts taxpayers to false “Self Employment Tax Credit” claims on social media
The Internal Revenue Service (IRS) has issued a consumer alert regarding false claims about a non-existent "Self Employment Tax Credit" circulating on social media.
This alert follows numerous reports of taxpayers being misled into filing incorrect claims based on inaccurate information.
The misleading “Self Employment Tax Credit”
Promoters and social media platforms are falsely advertising a so-called "Self Employment Tax Credit" as a way for self-employed individuals and gig workers to receive large payments for the COVID-19 pandemic period.
This misinformation suggests that people can receive up to $32,000, which is not accurate.
The IRS clarifies that the real credit is for Sick Leave and Family Leave, and it has very specific qualifications that most taxpayers do not meet.
Eligibility for sick leave and family leave credits
- Limited to 2020 and 2021: These credits are available only for certain COVID-19 related circumstances in the years 2020 and 2021, not for 2023 tax returns.
- Specific conditions: To qualify, self-employed workers must meet detailed criteria, such as being unable to work due to caring for someone under quarantine or isolation.
- Incorrect claims: The IRS is noticing that many taxpayers are improperly using Form 7202 to claim these credits based on employee income, not self-employment income.
Importance of consulting a trusted tax professional
The IRS strongly advises taxpayers to consult with a trusted tax professional before filing any claims related to the "Self Employment Tax Credit" or any other dubious tax credit circulating on social media.
This is to ensure eligibility and avoid potential penalties.
Similar scams and additional warnings
The IRS has seen patterns similar to the misleading "Self Employment Tax Credit" in the aggressive promotion of the Employee Retention Credit.
Both involve technical credits that have been misrepresented as easy ways to receive large refunds, which is not the case.
Other scams include:
- Fuel Tax Credit scam: Incorrect claims for this credit have led to delayed refunds and the need for additional documentation.
- Household employment taxes: Dubious claims in this area have also been flagged by the IRS.
IRS commissioner’s statement
IRS Commissioner Danny Werfel emphasized the importance of not being misled by false social media claims.
“Scam artists prey on people's hopes and the complexity of the tax system. Taxpayers should always rely on trusted tax professionals for accurate advice and thoroughly review their tax returns before filing.” - Danny stated
Conclusion
The IRS continues to warn taxpayers against these scams and encourages them to seek accurate information and guidance from reputable sources.
Avoid falling for misleading claims and ensure your tax filings are accurate and compliant with IRS regulations.