$162 Million in Penalties: Don’t Fall for Tax Credit Scams on Social Media

Lately, a wave of taxpayers in California and across the country caught in tax scams fueled by misleading social media posts. These “tips” often claim that anyone can qualify for special tax credits — but the reality is, filing based on bad advice can cost you thousands.

According to recent reports, taxpayers have racked up more than $162 million in penalties tied to false claims for credits such as the Fuel Tax Credit or the Sick and Family Leave Credit.

At Velin & Associates, Inc., we want our clients — from YouTubers and TikTokers to Shopify store owners, dentists, doctors, and small business owners — to know how these scams work and how to protect yourself.

How These Tax Scams Spread

Fraudulent refund schemes often share the same red flags:

• Posts on TikTok, Instagram, or Facebook claiming “everyone qualifies” for certain tax credits.
• Promises of easy refunds with minimal paperwork.
• Advice to file an amended return even if you don’t qualify.
• Encouragement to ignore IRS letters or respond with false information.

💡 Example: A creator in Los Angeles saw a post claiming they could claim the Fuel Tax Credit (meant for businesses operating heavy equipment). They amended their return, expecting a $5,000 refund — but instead received an IRS letter denying the claim and assessing a $5,000 penalty for filing a frivolous return.

What Happens If You Fall for It

Submitting a false claim isn’t harmless. The consequences can include:

• Refund delays or denials
• Civil penalties of $5,000 for frivolous filings
• Additional IRS audits or examinations
• Legal and financial headaches that can drag on for years

For influencers and small business owners, this doesn’t just affect your taxes — it can impact your cash flow, credit, and reputation.

What To Do If You’ve Been Misled

If you think you may have filed incorrectly, don’t panic — but act quickly:

1. File an amended return (Form 1040-X) to correct false claims.
2. Respond to IRS letters promptly — ignoring them makes penalties worse.
3. Work with a qualified CPA who can help minimize damage and protect you from further mistakes.

How Velin & Associates Can Help

At Velin & Associates, Inc., we’ve helped countless clients — from Amazon business owners to dental practices — clean up incorrect filings, resolve IRS notices, and prevent costly penalties. Here’s what we do:

• Review your tax returns to identify red flags and risky claims.
• File accurate amended returns to correct mistakes before they escalate.
• Communicate with the IRS on your behalf so you’re not navigating notices alone.
• Educate and plan ahead so you know which credits and deductions you actually qualify for.

💡 Example: If you brought us a return prepared by a so-called “tax expert” on Instagram who claimed they could get you a $10,000 refund, but the IRS denied it and issued penalties, we would work with you to amend the return, reduce exposure, and put proper tax planning in place.

Bottom Line

If a refund offer on social media sounds too good to be true, it probably is. The cost of fixing a false claim can far exceed any potential benefit.

The smarter choice? Rely on a trusted CPA who understands your business, your industry, and California’s tax rules.

At Velin & Associates, Inc., we specialize in helping creators, online sellers, medical professionals, and small businesses stay compliant while maximizing legitimate tax benefits.

For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org