The Internal Revenue Service issued a warning Friday to taxpayers, tribal communities, businesses and tax professionals about promoters selling fraudulent "Tribal Tax Credits" that don't actually exist under federal law.
The scammers are falsely claiming the credits can reduce federal tax liabilities or generate refunds. The fake tax credits are being touted as "Tribal Tax Credits," "Native American Tax Credits," "Sovereign Tribal Tax Credits," or similar names. However, such tax credits do not exist under federal law, and taxpayers who claim them can even face civil and criminal penalties.
"Protecting taxpayers and the integrity of the tax system remains central to the IRS mission," said IRS CEO Frank Bisignano in a statement. "For that reason, the IRS will always confront abusive and illegal tax schemes that, if left unchallenged, could undermine confidence in our tax system."
Bisignano himself is also facing allegations of misrepresentation, however, in his other job as commissioner of the Social Security Administration. A group of Democrats on the tax-writing House Ways and Means Committee sent him a
As for the fraudulent tribal tax credits, the promoters typically encourage taxpayers to purchase the purported credits from an entity they claim is associated with a tribal community. They often promise a significant return on investment by reducing an existing tax liability or generating a tax refund, and they may pressure taxpayers to act quickly.
Promoters may also urge taxpayers who previously claimed these fake credits to challenge the IRS during an audit. A federal tax return claiming a nonexistent Tribal Tax Credit contains a false claim, the IRS noted, regardless of whether a refund was issued initially based on the fake Tribal Tax Credit.
The IRS said financial advisors and tax professionals should be cautious if they're approached by promoters and avoid aiding these schemes. Taxpayers and tribal communities can use
