The IRS continues warning taxpayers of new scams that spread across the United States. Preventing scams is the best way to fight these issues since they could rapidly contact thousands of Americans.
In this case, they have targeted the Clean Energy Tax Credit. Some “unscrupulous return preparers”want taxpayers to buy clean energy tax credits. So, they are aimed at individuals who file Form 1040.
Taxpayers are improperly claiming IRA credits says IRS
To cut a long story short, scammers persuade taxpayers to claim tax credits they are not entitled to. They take advantage of the complexity of the tax law. Making people believe something will be possible when it isn’t.
The IRS insists taxpayers should be wary of scammers trying to push them to claim tax credits. Make sure you only hire a professional tax preparer. Not doing so can cause a lot of trouble.
As a matter of fact, all taxpayers should use the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. In this way, you will avoid hiring someone who is a scammer. Visit the official website to find one: https://irs.treasury.gov/rpo/rpo.jsf
What are the dangers of claiming a tax credit you are not entitled to?
Claiming a tax credit you are not eligible for can be risky. Actually, taxpayers “risk future compliance action by the IRS”. What is more, they will be responsible for repaying the inflated credit.
Needless to say, you may have to pay interest to give that money back. Apart from having to pay any interest, there could be possible and unwanted penalties claims the IRS.
If you are thinking about buying Clean Energy Tax Credits under the IRA, contact a tax professional you can trust. Make sure you understand what passive activity rules are and its limitations. Those taxpayers who believe they spotted a scam, report it now. Fuel Tax Credit scams are also increasingly worryingly.