IRS Warns of Fake 'Self Employment Tax Credit' Scams

The Internal Revenue Service (IRS) has issued a consumer alert warning taxpayers about misleading information circulating on social media regarding a fictitious “Self Employment Tax Credit.” This misinformation is leading taxpayers to file false claims based on non-existent credits. Tax preparers should be aware of this issue and advise their clients accordingly to avoid potential problems with the IRS.

Promoters and social media influencers are falsely advertising the “Self Employment Tax Credit” as a substantial payment opportunity for self-employed individuals and gig workers related to the COVID-19 pandemic. This mirrors previous misleading promotions regarding the Employee Retention Credit, with claims that people could receive up to $32,000, which is not accurate. As a tax professional, it is crucial to inform your clients that this credit does not exist and that the information being spread is incorrect.

The actual credit in question is the Credits for Sick Leave and Family Leave, which is significantly more limited and technical. It applies only under specific conditions related to COVID-19 for the years 2020 and 2021, and many do not qualify. The IRS is closely monitoring claims filed under this provision, and filing incorrect claims can lead to serious consequences. Tax preparers should ensure their clients understand the eligibility criteria and avoid filing claims based on false information.

IRS Commissioner Danny Werfel emphasized the importance of consulting with a trusted tax professional before acting on any claims seen on social media. He stated, “This is another misleading social media claim that’s fooling well-meaning taxpayers into thinking they’re due a big payday.” Tax professionals should guide their clients to verify the legitimacy of any tax credit claims and rely on accurate information from the IRS or a qualified tax advisor. This proactive approach will help prevent clients from falling victim to scams and ensure their tax filings are accurate and compliant with IRS regulations.