Vetting Online Tax Advice: Four Key Questions to Ask

Individuals may encounter tax advice on social media platforms that could lead to negative consequences if followed incorrectly. Mark Gallegos, a certified public accountant, states that faulty tax advice can result in penalties, interest, and potential prosecution from the Internal Revenue Service (IRS). Tax imposter scams are also reportedly increasing, according to the Better Business Bureau.

To vet tax advice, Gallegos recommends considering four key questions:

How to Vet Tax Advice: Gallegos's Four Key Questions

1. Eligibility for Tax Hacks

Tax laws are highly specific, with credits and deductions having eligibility requirements, income limits, and documentation criteria. If advice suggests that "everyone qualifies" for a "little-known tax loophole," it is likely inaccurate.

Consulting IRS.gov or a qualified professional is advisable before taking action.

2. Advisor Qualifications

Qualified tax advisors include certified public accountants (CPAs), tax attorneys, and enrolled agents. Some financial advisors, such as certified financial planners, can discuss tax implications for financial plans but may not be technical experts on the tax code. Advice from individuals who do not fall into these categories or do not cite sources should be approached with caution.

3. The Concept of "IRS Roulette"

Tax advice that relies on the expectation that the IRS might overlook discrepancies on a tax return is considered illegitimate.

This approach, referred to as "IRS roulette," carries significant risk and is not recommended.

4. Urgency in Advice

Tax scams often employ language that pressures individuals to act urgently, such as demanding immediate payment or threatening penalties for delayed action. Such high-pressure tactics, including phrases like "final attempt to reach you" or "last chance," are indicators of potential fraud and should be viewed as red flags.