Businesses that have had their Employee Retention Credit (ERC) claims denied by the Internal Revenue Service (IRS) have various options for seeking the refunds they are owed. One of these options is to file a refund lawsuit in federal court. However, this is generally a last resort, and in most cases, it will be beneficial for businesses to first seek to resolve their disputed claims with the IRS or through its Independent Office of Appeals.

Federal investigations targeting fraud under the Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) program continue to present substantial risks in 2026. The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) are aggressively pursuing cases against individuals and companies suspected of submitting fraudulent PPP loan applications and ERC claims, and the DOJ recently announced multiple prosecutions involving more than $260 million in alleged pandemic-era fraud.

While willful tax law violations can expose U.S. taxpayers to criminal penalties, taxpayers may be able to avoid criminal prosecution by submitting a voluntary disclosure to the Internal Revenue Service (IRS). However, submitting a voluntary disclosure is a complex, multi-step process, and strict eligibility requirements apply. As a result, an informed and strategic approach is critical, and this starts with engaging experienced tax counsel. Learn more from Virginia tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group:

With hundreds of billions of taxpayer dollars lost to fraud during the COVID-19 pandemic, exposing pandemic-era fraud remains a top priority for the Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ). Audits and investigations targeting fraud under the Paycheck Protection Program (PPP) and the Employee Retention Credit (ERC) programs can pose substantial risks, and targeted businesses and individuals must be prepared to protect themselves by all available means. Learn more from experienced Virginia tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

Taxpayers who are behind on their federal filing and payment obligations will want to come into compliance before the IRS opens an audit or investigation. Facing an audit or investigation presents substantial risks—especially when taxpayers know they haven’t fully complied with the requirements. In many cases, coming into compliance will involve utilizing one of the IRS’ streamlined voluntary disclosure programs. Learn more from Virginia international tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group: