ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – BEWARE OF SOCIAL MEDIA TAX SCAMS
By Robert S. Schriebman
The IRS and its Security Summit partners recently issued a press release warning of social media tax abuses, specifically involving W2s and IRS Form 8944. IR-2023-61 published March 28, 2023.
These warnings are part of the IRS’ Dirty Dozen tax scams. Social media has become a fountainhead of information and communication. It connects people and information from all over the world. Unfortunately, sometimes people provide bad advice that can lure well-meaning taxpayers into trouble. The IRS warns the public to be wary of trusting internet tax advice, whether it is a fraudulent tactic promoted by scammers or is just plain false tax-related information.
This article will discuss the Form 8944 fraud and the W2 fraud set forth in the press release.
Form 8944 Fraud
Form 8944 is a form used by tax return preparers to request a waiver from having to e-file a return. The waiver is due to hardship. According to the IRS, “There are wildly inaccurate suggestions being made about this form.” The misleading information centers around informing taxpayers that they can receive a refund from the IRS even if the taxpayer has a balance due. Form 8944 is for tax professional use only. The waiver form is used by tax professionals requesting that they be allowed to file a paper return instead of filing electronically. It is not a form that can be used by a taxpayer to avoid paying taxes. The IRS warns that taxpayers who intentionally file this form with false or fraudulent information can face serious consequences including potential civil and criminal penalties.
This scheme, which is circulating on social media, encourages people to use tax software to manually fill out a false W2 Form. The scheme includes false income information. In this scam, crooks suggest people makeup large income and withholding figures. Scam artists then instruct people to file a bogus tax return electronically, in hopes of getting a big refund. This scam is targeting both IRS and FTB returns. The IRS is on the alert to target these W2 schemes and will verify W2 information. Taxpayers who knowingly file fraudulent W2s may face stiff civil and criminal penalties.
The IRS suggests taxpayers go to its website, IRS.gov and review the following publications:
- IRS.gov has form repository with legitimate and detailed instructions for taxpayers on how to fill out the forms properly.
- Use IRS.gov, official IRS social media accounts, or other government sites to fact check information.
To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations:
IRS Lead Development Center, Stop MS5040, 2400 Avila Road, Laguna Nigel, CA 92677-3405
Never be afraid to consult a reputable tax professional for advice. The worst thing you can do is not seek advice when you get that “old feeling” that something is not quite right or sounds too good to be true.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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