Finance
January 1, Beware: IRS Warns of New Clean Energy Tax Credit Scam on the Rise
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Renewable resources like solar panels and wind turbines provide environmental benefits and financial incentives for homeowners through the Residential Clean Energy Credit (RCEC). However, the Internal Revenue Service (IRS) recently warned against a new scam involving the purchase of clean energy tax credits. In a July 3 press release, the IRS urged filers “not to fall victim to a new emerging scam involving buying clean energy tax credits.”
The RCEC allows taxpayers who “invest in renewable energy for [their] home such as solar, wind, geothermal, fuel cells or battery storage technology” to qualify for a nonrefundable credit. The IRS states the credit is equal to “30 percent of the costs of new, qualified clean energy property for your home installed anytime from 2022 through 2032.”
Unfortunately, dishonest tax return preparers have been misrepresenting the rules for claiming clean energy credits under the Inflation Reduction Act (IRA). The IRS has seen returns where income tax was reduced using fraudulent IRA credits.
“Most taxpayers do not have passive income and a passive income tax liability. Most investment activities are not considered passive,” explains the agency. Taxpayers caught in the scam will face penalties and must repay the inflated credit, along with interest and other possible fees.
IRS Commissioner Danny Werfel said, “This is another example where scammers are trying to use the complexity of the tax law to entice people into claiming credits they’re not entitled to.” He advises taxpayers to use a reputable tax professional before claiming complex credits.
To avoid falling victim to this scam, consult trusted tax experts for advice on purchasing clean energy credits within IRA guidelines.
As our loyal readers, we encourage you to share your thoughts and opinions on this issue. Let your voice be heard and join the discussion below.
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Crossram
July 17, 2024 at 9:16 pm
Is the IRS going to bring their guns.