A family business may be used to hide financial and business assets from an IRS employee.
The IRS has issued new guidance on how to use child accounts to evade the taxman, saying it’s “not uncommon” for children to share their family business information on Facebook.
But the guidance does not require parents to provide information, only to parents.
It does state that parents should make sure their children are properly logged in to their social media accounts.
The new guidance comes after the agency received complaints that a family that owns a popular child-friendly children’s book business was using Facebook to hide business assets, including millions in taxes, and then filing for bankruptcy.
The guidance says that the child can use their account to “disclose the identity of the parent who owns or controls the business and/or provide information to facilitate the establishment of a family trust to conceal the financial and other assets of the business.”
The guidance does require the parent to ensure that their children have their own email address and other personal information, such as their Social Security number.
The IRS said the child would be required to verify their social security number before using the account.
The agency did not immediately respond to a request for comment.
The new guidelines are a departure from past guidance that has suggested parents should keep an eye on the Facebook account of their children to ensure they are not using it to hide their family businesses.
In 2011, the IRS issued guidance clarifying that parents must ensure that children are not accessing Facebook in violation of IRS rules.