The Internal Revenue Service (IRS) has issued a consumer alert warning taxpayers about misleading information circulating on social media regarding a non-existent “Self Employment Tax Credit” scam. Here are the key points:
False Claims and Misleading Information: Promoters are marketing a fictional “Self Employment Tax Credit” as a way for self-employed individuals and gig workers to receive substantial payments related to the COVID-19 pandemic. This misinformation mirrors previous misleading marketing tactics used for the Employee Retention Credit.
Inaccurate Eligibility Claims: Social media posts are suggesting that many people qualify for this tax credit and can receive payments of up to $32,000. However, this is not true.
Real Credit Details: The actual credit being referenced is the Credits for Sick Leave and Family Leave, which is significantly more limited and technical. Many taxpayers do not qualify for this credit, and the IRS is scrutinizing claims made under this provision.
IRS Commissioner’s Warning: “This is another misleading social media claim that’s fooling well-meaning taxpayers into thinking they’re due a big payday,” said IRS Commissioner Danny Werfel. He advises taxpayers to consult with a trusted tax professional before paying someone to file these claims to determine eligibility.
Specific Eligibility Requirements: The Credits for Sick Leave and Family Leave are available only for specific COVID-19 related circumstances in 2020 and 2021. These credits cannot be claimed on 2023 tax returns. The IRS has noted numerous instances of incorrect claims using Form 7202, which is intended for self-employed individuals, not employees.
Technical Criteria for Credits: To qualify for these credits, self-employed individuals must meet specific criteria related to their inability to work in 2020 and 2021, such as caring for someone under a quarantine order. Detailed FAQs on the IRS website outline these technical requirements.
Aggressive Marketing Similarities: The promotion of the fictitious “Self Employment Tax Credit” bears similarities to the marketing of the Employee Retention Credit. Both are technical credits mischaracterized by some as easy ways to obtain significant government payments.
Taxpayers are urged to be cautious and seek professional advice to avoid falling victim to these misleading claims. For accurate information and detailed eligibility criteria, visiting the IRS website is recommended.
At Mark Sullivan Consulting, we specialize in protecting taxpayers from misleading claims and ensuring they receive accurate, expert advice on tax matters. With decades of experience in IRS federal tax controversy, audit, and appeals representation, our team is here to guide you through the complexities of tax credits and deductions. Contact us today for trusted, professional assistance and safeguard your financial well-being.
About the author
Mark W. Sullivan, EA founded Sullivan Consulting in 1998. He specializes in federal tax controversy representation, appeals and consulting on behalf of individuals, businesses, law, and accounting firms nationwide. In addition, he has served as the consulting and expert witness in numerous civil and criminal cases in multiple federal district courts.
Mark has an unlimited Enrolled Agents license and is admitted to practice before the Internal Revenue Service based on his extensive experience as a Revenue Officer in New York, NY, St. Louis, MO and Washington, D.C.
Copyright 2024
Mark Sullivan Consulting, PLLC.
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
Additional reference: IR-2024-187
Comments