Viral TikTok posts are telling Americans to stop paying taxes by illegally exempting themselves from tax withholdings.
The videos suggest that it’s possible to avoid paying federal taxes by selecting "exempt" on IRS Form W-4, or Employee’s Withholding Certificates. The videos urge viewers to reach out to their employers and request zero-dollar tax withholding, assuring that companies have to comply.
The videos further imply that not having taxes withheld means not paying taxes — a false claim that can land taxpayers in trouble with the IRS if followed.
"The videos where people are telling others to claim exemption on W-4 are very dangerous," Ahad Ali, CPA and CEO of Ahad&Co, a CPA firm based in New York City, told Yahoo Finance. "That's not how it works, and there are some serious implications involved that many people don't know."
Falsely claiming "exemption" on a W-4 doesn’t mean you get to skip out on federal taxes like the videos imply. In fact, taxpayers would need to pay back all taxes due for the year during the filing season and may even be subject to penalties and interest.
The social media platform, popular with millennials, Gen Z, and Gen Alpha, is littered with other bad advice. Taxpayers, beware — or be prepared for the tax man.
Full coverage: Taxes 2024 — Everything you need to file your taxes on time
'Gurus' urging taxpayers to eliminate tax withholdings
A quick search on TikTok turns up videos baiting unassuming taxpayers with flashy text declaring "how rich people write off their dogs on taxes" and "how you can be non-taxable."
"It is unfortunate because tax law is already somewhat confusing to the average person," Greg Kling, CPA and associate professor at the USC Leventhal School of Accounting, told Yahoo Finance. "Now you have people who candidly don't know what they're talking about posting videos."
What the TikTok "gurus" don’t say is that taxpayers would need to pay an entire tax bill in April if they didn’t have any taxes withheld during the year. And if that bill is not paid, the IRS can charge penalties and interest on outstanding balances.
"That tax that you didn't pay throughout the year on your paycheck because you claimed exemption now becomes due," Ali said. "You [could] end up paying more because of the various penalties and interest."
Furthermore, the tax agency can go after taxpayers who skip filing returns and charge those who commit serious delinquencies with tax evasion, a felony punishable by fine or imprisonment.
"All these aggressive collection actions can come into play," Ali said. "If you don’t pay in full, make plans to pay, or go into a payment agreement [with the IRS], then it can levy your bank account, garnish your paycheck."
Read more: What if I can’t pay my taxes? 5 ways to manage your bill.
While the IRS does allow exemptions from withholding to certain taxpayers, the W-4 form instructions clearly state two requirements: The first is taxpayers must not have had tax liability last year, and the second is taxpayers must expect no tax liability in the current tax year. Those provisions are virtually never mentioned in the videos.
"I would say 99.99% of people should not be [exempting withholding]," Grant Dougherty, enrolled agent and founder of Dougherty Tax Solutions, told Yahoo Finance.
The phony claims run rampant on social media, garnering millions of views. One creator who advised taxpayers to stop paying taxes by stopping federal withholding declared on the platform that he is now "non-taxable." The video generated nearly half a million views.
Other videos promote similar misinformation, egging US taxpayers to go on a tax strike and arguing the "no taxation without representation" ideology.
One video waved around a form W-4T, Voluntary Withholding Agreement, for viewers to submit to their human resources department.
"There is no such form," Ali said.
He published a rival TikTok video educating viewers on the problems with selecting exemption on W-4 in an effort to ensure that the correct information is also on the platform.
"You have a lot more of the younger generation on [TikTok]," Ali said. "They are getting a job for the first time, or changing jobs, or having life events like marriage or children. And all of those affect the W-4. So my goal was to educate them to not have a surprise during tax season."
The legal stuff
One recurring topic in TikTok videos is the misinformation that filing and paying taxes is voluntary. But the truth is that the US Constitution gives Congress the power to tax Americans in Article I, Section 8, the Taxing and Spending Clause: "The Congress shall have the Power to lay and collect Taxes, Duties, Imposts and Excises…"
"There is a group of folks who are known as tax protesters, where they basically don't pay their taxes, and every time they go to court, they say taxes are unconstitutional," Kling said. "And they always lose."
In a recent court case, State of Colorado v. Steven Darbee, a man was charged with tax evasion, accused of falsifying his W-4 withholdings since 2014 by claiming up to 99 dependents and exempting himself from withholding. The court ordered Darbee to pay over $308,000 to the IRS in back taxes, interest, and penalties and serve 12 months and one day in jail.
Whether the IRS will prosecute people for spreading false information in the future, Kling thinks there could be a chance. However, the IRS is not there yet.
"I don't think the law and the enforcement efforts have caught up with where we're at today," Kling said.
Meanwhile, the misleading videos continue to spread.
"You just get very charismatic [content creators] telling people what they want to hear whether it's right or wrong," Dougherty said, "and people take it the wrong way and run with it."
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
Read the latest financial and business news from Yahoo Finance
