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TaxBuzz Top 5 - IRS Warns of Multiple Scams, Hunter Biden Lawyers Request Dismissal, Cite Trump Ruling & More

TaxBuzz Top 5 - IRS Warns of Multiple Scams, Hunter Biden Lawyers Request Dismissal, Cite Trump Ruling & More

Each Friday, TaxBuzz brings you the top five tax and accounting headlines you need to know from the workweek. We know life can get busy and you don't always have time to scroll through your news feed to stay informed.

We weed through all of the week's stories to showcase the most important updates in the tax and accounting world.

1. IRS Warns of Misleading “Self Employment Tax Credit” Claims on Social Media

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Credit: Skyhobo/GettyImages

The IRS this week issued a consumer alert about misinformation circulating on social media regarding a non-existent “Self Employment Tax Credit.” Promoters claim that self-employed individuals and gig workers can receive significant payments for the COVID-19 pandemic period, similar to the Employee Retention Credit.

“These misleading social media claims are fooling well-meaning taxpayers into thinking they’re due a big payday,” said IRS Commissioner Danny Werfel. The so-called credit being referenced is actually related to the Credits for Sick Leave and Family Leave, which apply only to specific COVID-19-related circumstances in 2020 and 2021, not 2023. The IRS warns that filing false claims could lead to serious consequences and encourages taxpayers to consult trusted professionals before making any such claims.

The IRS has seen repeated instances of incorrect usage of Form 7202, which should only be used by those who meet the stringent criteria for the Sick and Family Leave Credits. The IRS is closely scrutinizing these claims to ensure compliance.

“Scam artists prey on people’s hopes, using the complexity of the tax system to convince them of secret ways to get big refunds,” added Werfel. 

2. IRS Warns of New Scam Involving Clean Energy Tax Credits

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In addition to the non-existent "Self-Employment Tax Credit" scam, the IRS also warned taxpayers about another new fraudulent scheme this week. This scam involves the misrepresentation of clean energy tax credits under the Inflation Reduction Act (IRA). Unscrupulous tax return preparers are misleading individuals into improperly claiming these credits on their Form 1040.

“These scammers use the complexity of tax laws to entice people into claiming credits they’re not entitled to,” said IRS Commissioner Danny Werfel in an official statement. The scam typically involves preparers filing returns that claim IRA credits to offset income tax from wages, Social Security, and retirement account withdrawals. However, these credits can generally only offset income from passive activities, which most taxpayers do not have.

The IRS emphasizes that taxpayers should consult reputable tax professionals before claiming such credits to avoid potential compliance actions, including repaying the credit, plus interest and penalties.

The IRS also reminded taxpayers of other scams involving credits like the Fuel Tax Credit and the Sick and Family Leave Credit, advising caution and verifying eligibility before filing claims.

3. Hunter Biden Lawyers Request Dismissal, Cite Trump Ruling

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Credit: Bruce Bennett/Getty Images

Lawyers for Hunter Biden have asked federal judges in California and Delaware to dismiss the criminal tax and gun cases against him, citing recent legal opinions by Supreme Court Justice Clarence Thomas and the dismissal of the criminal classified documents case against former President Donald Trump.

Per CNBC, Biden’s lawyers argue that the appointments of both U.S. Attorney David Weiss as special counsel for Biden and Jack Smith for Trump are unconstitutional under the Appointments Clause. They point out that both appointments were made by Attorney General Merrick Garland without Senate confirmation, making them invalid.

The motions emphasize the need for Congress to establish the office of a Special Counsel, noting that Weiss was already a Senate-confirmed U.S. Attorney. Hunter Biden’s lawyers claim that individual taxpayers claiming improper credits risk future IRS compliance action.

Furthermore, the filings cite recent developments, including a Supreme Court ruling suggesting Trump’s presumptive immunity from criminal prosecution for official acts as president, as a basis for their argument. Biden’s lawyers highlight that these legal developments could impact the validity of Weiss's appointment and the ongoing charges against Hunter Biden.

President Biden has previously said he wouldn't pardon his son should he be convicted.

4. Nebraska Gov. Jim Pillen Unveils Property Tax Relief Plan Amid Criticism

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Credit: Jacob Boomsma/Getty Images

On July 18, 2024, Governor Jim Pillen introduced “Nebraska’s Plan,” a sweeping proposal aimed at mitigating the state’s property tax crisis. Pillen emphasized the urgency, stating, “It’s a crisis that has been accelerating at warp speed, and it’s time to fix it.” T

According to a report in the Nebraska Examiner, the plan proposes several key changes: Imposing caps on county and municipal property tax collections based on the consumer price index or 0% in deflationary times, funding over 80% of local K-12 education costs with state funds, and restructuring existing property tax relief programs without cutting current homestead exemptions. It also includes the removal of over 100 sales and use tax exemptions, with most goods taxed at 5.5%, and increased “sin” taxes on products such as cigarettes and alcohol.

Despite the bold measures, the plan faces significant opposition. Critics, including State Sen. Julie Slama, argue that it could lead to higher overall tax burdens, describing the proposal as “all fluff and no substance.” Other lawmakers have voiced concerns about its sustainability and potential financial impact, questioning whether it truly offers relief or shifts burdens elsewhere.

5. Portland, OR City Council Candidate Moses Ross Faces IRS Tax Liens

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Moses Ross, a candidate for Portland City Council, is currently dealing with significant tax issues. His company, Smart Voter Contact, which supports Democratic candidates, has been issued 19 separate tax liens by the IRS this year, totaling $62,718. The liens are related to unpaid taxes dating back to 2014, primarily concerning 941 forms for employee paycheck withholdings.

Ross, who also leads the Multnomah Neighborhood Association, is running for one of the three available seats in District 4, which includes all areas of Portland west of the Willamette River.

Willamette Week reports that Ross has secured $40,000 in campaign funds through the city’s Small Donor Elections program, which matches small contributions at up to a 9-to-1 ratio. He claims that all funds from this program will be used “solely to campaign activities, and they will be used transparently and responsibly.”

Ross attributes the tax issues to disruptions caused by the departure of his bookkeeper in 2014 and the impacts of the COVID-19 pandemic. He has established a payment plan with the IRS and is committed to settling his tax liabilities.

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