The US tax agency has tightened sanctions for those who include false or malicious information. Learn about the new rules, how they affect taxpayers, and what to do to avoid penalties. The Internal Revenue Service (IRS) began the 2025 tax filing season with the expectation of receiving more than 140 million returns by April 15. However, the agency warned that any return that includes a “frivolous” credit or attempts to obstruct the tax administration will be penalized with $5,000 for each form, as stated in Fine 6702 (a) of the Internal Revenue Code (IRC).
It is important to emphasize that this fine will also be applied to joint returns that present incorrect information, affecting each spouse individually. The IRS insists on the need to be completely truthful in the documentation in order to avoid irregularities.
New Internal Revenue Service (IRS) penalties for those who break the filing rules this year
In addition to these fines, the IRS has stepped up its monitoring of returns that appear to have been prepared by a “ghost preparer”. These professionals do not sign or include their PTIN (tax preparer identification number) on the return, which is considered a risky practice for the taxpayer. As a preventive measure, the agency will send warning letters to those affected by this type of practice.
The IRS has also announced a specific form for claiming the Fuel Tax Credit and will review some sections of Form 1040 more closely in order to prevent fraud or data manipulation. Those who are sanctioned could face, in addition to the fine, more exhaustive investigations in the future.
IRS to monitor transactions on Venmo, Cash App and PayPal to detect possible evasion
From 2024, payment platforms such as Venmo, Cash App and PayPal will have to report annual income in excess of $5,000. This measure will be tightened in stages until 2026, with the minimum threshold being reduced to just $600. The main objective is to monitor the income of independent workers, small businesses and people with secondary commercial activity more accurately. The following table summarizes the reporting thresholds (fiscal year annual income threshold):
- 2024: $5,000
- 2025: $2,500
- 2026 and beyond: $600
Consequently, freelancers, consultants, and online sellers should pay special attention to the new provisions. Form 1099-K will be the key document for reporting this income, while payments between friends or family (for example, splitting restaurant bills) will be exempt.
Recommendations to avoid penalties and comply with IRS requirements
Before submitting the documentation, taxpayers are advised to:
- Update tax information: verify that your details (TIN or SSN) are correctly registered.
- Separate personal and professional accounts: this will allow you to keep more transparent control of taxable transactions.
- Keep clear records: documenting each payment or invoice will help you distinguish between taxable and non-taxable income.
- Consult a professional: an authorized tax advisor can provide guidance on deductions and obligations, avoiding errors that can lead to fines.
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