IRS 2023 Dirty Dozen – Scam #4:  False Fuel Tax Credit Claims

IRS 2023 Dirty Dozen – Scam #4:  False Fuel Tax Credit Claims

“People should watch out for erroneous fuel tax credit claims and the scammers that promote them,” said IRS Commissioner Danny Werfel. “These scammers will often charge a hefty fee for these bogus claims, and participants also face the possibility of identity theft. This is another example that people should always remember: Be wary if a tax deal sounds too good to be true.” authentication process through IRS.gov, to create their own IRS online account.

Improper credits continue to be an important area of focus for the IRS. The fuel tax credit is meant for off-highway business and farming use and, as such, is not available to most taxpayers. However, unscrupulous tax return preparers and promoters are enticing taxpayers to inflate their refunds by erroneously claiming the credit. The IRS has seen an increase in the promotion of filing certain refundable credits using Form 4136, Credit for Federal Tax Paid on Fuels.

In this scam, a third party convinces a taxpayer to fraudulently claim the credit with promises of a windfall refund. But the promoters are focused on their own gain, taking advantage of the taxpayer with inflated fees, refund fraud and identity theft.

Taxpayers contemplating participating in any questionable tax scheme such as this should be aware the IRS has increased its compliance efforts related to falsely claiming these credits. IRS processing systems, including new identity theft screening filters, are now stopping a significant number of suspicious fuel tax credit refund claims.

Before taking the bait on a dubious credit claim, taxpayers should seek advice from a legitimate source. Returns filed by individuals and tax preparers who knowingly claim a credit to which they are not entitled may face fines and even be subject to federal criminal prosecution and imprisonment.

Next week  #5: Fake Charities

(IRS Web Site  (TTT 071123)