April 15 is the official deadline for individual tax filing in the United States. Many taxpayers have submitted their tax returns on time but have not yet received their refunds. Accountants suggest that there are various reasons for this situation, with one of the more challenging reasons likely being related to taxpayers hastily filing for refunds or falling into tax fraud schemes.
The Internal Revenue Service (IRS) has long issued warnings about hasty filing for refunds, false claims, and tax scams. The agency has cautioned against schemes such as “ghost tax preparers” and inaccurate social media advice, which have led to thousands of taxpayers submitting exaggerated refund claims.
The IRS emphasizes that whether taxpayers are intentionally engaging in tax fraud or have been misled into it, anyone attempting to obtain substantial refunds through abuse of wage information or false deduction claims may face hefty fines and criminal liability.
In light of doubts surrounding the authenticity of many refund applications, the IRS has frozen refunds for some taxpayers. Improper applications can also lead to delayed refunds, although not everyone awaiting refunds is in such a situation.
Accountants advise taxpayers who realize they have fallen victim to tax scams or submitted false deduction claims to promptly consult trustworthy tax professionals and proactively file amended returns based on their specific circumstances. After all, tax filing must be truthful, and there are no “secret methods” to magically obtain extra-large refunds.
Before and after tax season, social media is flooded with various “tax-saving” tips, many of which claim to offer ways to secure substantial refunds.
IRS Commissioner Danny Werfel stated in a mid-May announcement, “Scammers and social media posts continue to spread false and misleading information, deceiving well-meaning taxpayers into believing they are entitled to unexpected windfall refunds.”
“We have identified improper refund claims during our fraud review process,” he said. “Taxpayers submitting such claims should realize they have been duped. If these taxpayers were eligible for refunds for other reasons, their claims will undergo detailed IRS scrutiny and may face lengthy delays.”
After investigations, the IRS found common improper refund claim practices centered around three areas: Fuel Tax Credit overclaims, erroneous Sick Leave and Family Leave credits, and Household Employment Taxes misrepresentations. The agency has provided clear explanations regarding these three deductions.
Fuel Tax Credit: This deduction is specifically designed for non-highway business and agricultural purposes. Taxpayers must have a commercial purpose and qualified commercial activities, such as farming operations or purchasing aviation gasoline, to be eligible for this credit. Most taxpayers do not qualify for this deduction.
Sick Leave and Family Leave Credits: These credits only apply to self-employed individuals during the 2020 and 2021 pandemic periods, yet the IRS has found many taxpayers still incorrectly using Form 7202.
Household Employment Taxes: Taxpayers “fabricate” household employees and then claim refunds based on false sick leave and family leave wages they never paid.
Additionally, some taxpayers have used tax fraud methods provided by scammers, manually completing W-2 forms using specific tax software, providing false income information, and more.
“Social media and individuals offering misleading advice have fueled these improper claims,” Werfel stated in his announcement. “Scammers exploit people’s desire for refunds and attempt to convince taxpayers that there are ‘secret methods’ to obtain large refunds through the complexity of the tax system.”
The IRS reminds taxpayers annually to be vigilant against tax-related fraud, including watching out for phishing emails or texts, avoiding fraudulent forms and bad advice on social media, and not using ghost tax preparers who do not sign or take responsibility for clients’ tax returns.