IRS Warns Against Fake Clean Energy Tax Credit Scams
TL/DR –
The Internal Revenue Service (IRS) in the U.S has warned taxpayers against a scam involving the purchase of clean energy tax credits under the Inflation Reduction Act (IRA). The scam targets individuals filing Form 1040, falsely promising they can use these credits to offset income taxes – however, these credits can only be applied to passive income. The IRS advises taxpayers to consult with a trusted tax professional and verify their eligibility before attempting to purchase and claim these credits, as inappropriate claims could lead to the repayment of received credits, accumulated interest, and potential penalties.
The IRS warns of a fast-growing clean energy tax credit scam
There’s a new clean energy tax credit scam that the IRS in the United States is warning taxpayers about. Fraudulent tax preparers are exploiting the tax credits offered by the Inflation Reduction Act (IRA).
Understanding the Scam
Scammers are promising big tax savings through such credits, despite the fact that many are not eligible for them. These fraudsters typically target those filling Form 1040, misguiding them to use these credits against income like wages, Social Security, and retirement account withdrawals.
According to IRS rules, clean energy credits are only for passive income, which most taxpayers do not generate. IRS Commissioner Danny Werfel warns that these scams are exploiting tax laws complexity to manipulate individuals into claiming benefits they’re not entitled to.
The Risks and Consequences
If taxpayers fall for this scam and claim inappropriate credits, the IRS will enforce repayment of claimed credits plus interest and potential penalties.
Tips for Taxpayers
If you’re thinking of purchasing clean energy credits under the IRA, make sure to consult a trusted tax professional and verify your eligibility to claim these credits.
Other Scams Monitored by the IRS
The IRS is also closely monitoring other scams enticing taxpayers to make unsuitable claims on various tax credits. Be vigilant and always verify tax-related information with reliable sources.
Report suspected fraudulent schemes or unscrupulous tax preparers using IRS Form 14242 or send the information by mail or fax to the IRS Lead Development Center in Laguna Niguel, California, or through the IRS Whistleblower Office. There’s a possibility of receiving monetary compensation for your report.
Staying educated and verifying information meticulously are the best defenses against tax credit scams. Always exercise caution and seek advice from reliable professionals when promised substantial tax benefits.
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