Unlawful Tax Advice Spread on TikTok Threatens Younger Generations

TikTok is witnessing a surge in misleading videos suggesting unlawful methods to evade tax payments, primarily targeting younger generations – millennials and Gen Z – who are new to navigating tax filings. The videos claim that individuals can avoid paying federal taxes or claim exemption on their W-4 Employee’s Withholding Certificates, advocating for zero-dollar tax withholdings which could potentially result in serious consequences.

These videos incorrectly insinuate that if no taxes are withheld, no taxes are owed, a false narrative that could land viewers in legal trouble if taken seriously. Moreover, ceasing tax withholdings does not equate to evading the responsibility of tax payment; on the contrary, it just postpones payment until the tax filing season. Falsely claiming “exemptions” can lead to an individual owing the entire tax amount during filing season, alongside potential penalties and interest.

Ahad Ali, CPA and CEO of Ahad&Co, a New York-based CPA firm, laments such misleading claims, mentioning the grave implications of following such misleading advice.

"Rich-people tax tricks" and the concept of being "non-taxable" are some other deceiving claims that these video creators, referred to as “gurus,” put forth. Greg Kling, a CPA and associate professor at the USC Leventhal School of Accounting, voices concern over such fraudulent advice on a subject that's already complicated for many.

The illusion constructed by these TikTok “gurus” dismisses the hungover reality of an entire tax bill due in April if no taxes were withheld over the year. Failure to pay this amount can result in penalties, interest on pending balances, and serious legal consequences, potentially including tax evasion charges.

Unfortunately, many viewers find these deceptive statements alluring. One creator, who falsely stated being "non-taxable" by stopping federal withholdings, generated almost half a million views with this false claim. Other videos include instigating taxpayers into a tax strike arguing – inaccurately – the "no taxation without representation" perspective.

As for exemptions from withholdings allowable by the IRS, the prerequisites are clear. Taxpayers must have had no tax liability last year and must foresee none in the current year, conditions rarely noted in these videos. Grant Dougherty, enrolled agent and founder of Dougherty Tax Solutions, suggests that the vast majority of people shouldn't be exempting withholding.

Invested individuals, such as Ali, are using the same platform to attempt corrective actions. Ali published a video on the social platform providing accurate knowledge about the implications of claiming exemption on W-4, specifically targeting the younger generation, for whom ticking events like first jobs, job transitions, marriages, or childbirth could impact their W-4 and induce tax surprises.

Unfortunately, some TikTok videos spread the misguided notion that filing and paying taxes is optional, disregarding the US Constitution's Taxing and Spending Clause (Article I, Section 8) which authorizes Congress to tax Americans. Such views have consistently been repudiated in court.

The perpetuation of misinformation and consequent reactions are matters of concern and potential legal consequences. While the IRS currently does not prosecute for spreading false tax information, the future could possibly witness stricter actions against such misinformation, according to Kling. Until then, the perpetuation of such misguided claims continues, mainly by content creators misuse their persuasiveness to tell audiences what they want to hear rather than informed facts.