IRS Warns New Yorkers of Clean Energy Tax Credit Scam

In a recent update, the Internal Revenue Service (IRS) has issued a cautionary alert to residents of New York State regarding a deceptive scam targeting the clean energy tax credit.

The scam preys on unsuspecting individuals by exploiting the rules for claiming clean energy credits under the Inflation Reduction Act (IRA).

Scammers Manipulating Transferability Provisions

The IRS has detected instances where taxpayers, especially those filing Form 1040 in New York State, have fallen victim to this fraudulent scheme. The scammers utilize the transferability provisions of the IRA to deceive individuals into wrongfully claiming clean energy credits to which they are not entitled.

Key to Avoiding Compliance Issues

To safeguard against becoming a victim of this scam, individual taxpayers in New York who are considering purchasing tax credits under the IRA should exercise extreme caution. Consulting reputable tax professionals before making any claims related to clean energy tax credits is important. Understanding the limitations outlined by the passive activity rules and other sections of the tax code is also important to avoid potential compliance issues with the IRS in the future.

Commissioner's Warning: Beware of Improper Credits

IRS Commissioner Danny Werfel reiterates the importance of seeking guidance from trusted tax professionals when dealing with complex tax credits like clean energy credits. He cautions New York State residents to be wary of anyone who encourages claiming improper credits. The IRS maintains strict scrutiny to detect and prevent such scams, ensuring taxpayers remain protected.

Repercussions for Inappropriate Claims

New York State taxpayers who fall prey to claiming incorrect credits should be aware of the potential repercussions they may face. This includes the obligation to repay the inflated credit amount along with accruing interests and penalties. To safeguard against these pitfalls, New York residents are strongly encouraged to report any suspected abusive tax practices or preparers to the IRS via the online reporting form.

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Resources for New York Residents

If you live in New York and want to educate yourself about clean energy credits and potential scams, information can be found on the IRS website. Additionally, consulting trusted and knowledgeable tax professionals can provide the help you need to navigate these complex matters.