A tax hack promoted on social media, claiming to provide a substantial refund, may not only fail to deliver on its promise but also result in severe repercussions from the IRS. The IRS has cautioned taxpayers against following fraudulent guidance that encourages them to utilize tax software to complete W2s with false income details. Some deceitful individuals may propose that taxpayers fabricate inflated income and withholding amounts to obtain significant refunds.
Employers send W2s to employees, which detail their yearly earnings, the amount of federal income tax deducted, and contributions made towards retirement, among other things. Employees use this data to complete their Form 1040, their personal income tax return, which determines whether they owe money to the IRS or are eligible for a refund. The refund amount may be higher if the withholding amount is larger.
The IRS has cautioned that individuals who employ such strategies may face various penalties
Falsifying information on a W2 is a guaranteed method to attract unwanted attention from the IRS. Employers furnish copies of W2s to the IRS, which cross-references the data with the information submitted on individual tax returns, according to tax and security specialists. This fraud is happening at a time when tax refunds are roughly 10% lower than the previous year, and many families are grappling with high inflation.
Amir Tarighat, CEO of cybersecurity company Agency, noted that numerous individuals on social media claim to be tax experts and offer tax hacks as a means of gaining attention. However, these hacks are often fraudulent, and they are not selling anything besides the promise of additional tricks.
Tarighat added that these tax tricks are undoubtedly bad advice. Such methods can lead to breaches of tax laws, resulting in the taxpayer incurring penalties and fines from the IRS. The IRS has cautioned that individuals who employ such strategies may face various penalties, including a $5,000 fine for submitting a frivolous return and the possibility of criminal charges for filing a false tax return.
Keith Hall, CEO of the National Association for the Self-Employed and a certified public accountant, noted that scammers may be counting on taxpayers filing their returns before the IRS can confirm matching data from an employer’s W2.
Keith Hall explained that if a tax return containing W2 information, including withholding, is submitted, the IRS will process it swiftly, even before verifying the matching process. However, he cautioned that individuals who resort to fabricating information will eventually be discovered. Hall emphasized that if someone suggests that a large refund can be obtained by falsifying W2 information, it is advisable to walk away as quickly as possible.