$5,000 Penalties: IRS Warns Taxpayers of False Tax Claims, Fuel Tax Credit, Sick and Family Credit Misuse on Rise

The IRS warns taxpayers about filing false tax returns especially regarding claims for tax credits like the Fuel Tax Credit, Sick and Family Credit, and household employment taxes.

IRS Warns of Misused Fuel Tax Credit and Sick/Family Leave Credit, Urges Thorough Tax Reviews

Commissioner Danny Werfel highlighted how scam artists mislead taxpayers into believing they qualify for large refunds through social media posts leading to investigations that delay legitimate refunds, according to the report of FOX Business.

The Fuel Tax Credit is for off-highway business and farming use requiring a genuine business purpose like agricultural operations. The Sick and Family Leave Credit meant for self-employed individuals during the pandemic, has been misused with taxpayers claiming it based on employee income instead of self-employment earnings.

Taxpayers have fabricated household employees to claim refunds for sick and family medical leave wages they never paid. Misinformation on social media fuels these fraudulent claims emphasizing the need for thorough tax return reviews and advice from reputable professionals.

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(photo: The National Desk)

IRS Warns of Withheld Refunds and $5,000 Penalties for False Tax Claims

Tax refunds may be held if the IRS suspects fraud requiring taxpayers to resolve issues like providing more documents or fixing mistakes. Tax preparers not signing returns can trigger extra IRS attention.

Visiting Taxpayer Assistance Centers isn’t compulsory, but taxpayers might need to fix fraudulent claims by amending their returns. Legitimate claimants flagged by the IRS can prove their eligibility with proper documentation.

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Furthermore, those found to have falsely claimed credits they don’t qualify for could face penalties up to $5,000 per return plus audits and potential criminal prosecution. The IRS stresses the importance of diligence in tax filings and urges reliance on credible sources to avoid falling victim to fraudulent schemes.