The IRS has alerted taxpayers about a new scam involving the purchase of clean energy tax credits. Fraudulent tax return preparers are misrepresenting the rules for claiming these credits under the Inflation Reduction Act (IRA). They are filing returns that improperly claim clean energy credits to offset income tax from wages, Social Security, and retirement withdrawals, which most taxpayers cannot benefit from due to passive activity rules.
The scam targets individuals filing Form 1040, leading them to claim credits they are not eligible for, risking future IRS compliance actions, and having to repay the inflated credit with interest and penalties.
Taxpayers are advised to consult reputable tax professionals before purchasing clean energy credits and to understand how passive activity rules apply. The IRS is actively monitoring this scam and warns against other misleading credit claims, such as the Fuel Tax Credit and Sick and Family Leave Credit.
To report fraudulent tax schemes, taxpayers can use online Form 14242 or submit it via mail or fax to the IRS Lead Development Center. Information can also be submitted to the IRS Whistleblower Office for potential monetary awards. For more details, visit the IRS website.
IRS warns of new scam targeting Clean energy tax credit | Internal Revenue Service
