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Bad Tax Advice on Social Media

04/17/2023 - Avoiding Fraud & Enhancing Security

Elderly woman in thought while looking over documents and her computer.

Every year the IRS publishes a “dirty dozen” tax scams that taxpayers should avoid. A new one was added this year: Getting tax advice from social media. The Service reported on two specific bad suggestions that have been observed circulating on social media, and warns that either of them could lead to tax penalties.

Form 8944 Fraud

One bad idea is to file Form 8944, Preparer e-File Hardship Waiver Request. For those unfamiliar with tax terminology, that might sound like a chance to get tax liabilities reduced. That not what the form is about. It is for professional tax preparers, not taxpayers, and concerns filing on paper instead of electronically. The form has no effect at all on anyone’s tax obligations, contrary to statements found on social media.

W-2 Fraud

This scheme involves filing a manual W-2 with large income and withholding figures, then filing an electronic return hoping for a substantial refund. The theory seems to be that the IRS will process the e-return quickly, and by the time the manual W-2 is processed the check will already have been sent. That is a weakness in the IRS administrative process, but because the Service is aware of the issue agents will be on the lookout for it.

Given the extreme complexity of the tax system, it is understandable that taxpayers could become confused and look to free sources of advice, such as social media. It’s possible that an innocent taxpayer could fall for the Form 8944 fraud. On the other hand, it should be obvious to anyone that filing a false W-2 is a tax crime, no one should claim to have been misled on that one.

For better tax advice, the IRS recommended that taxpayers consult tax professionals, tax preparation software, or the IRS itself.

Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.

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