IRS Investigations Targeting PPP Fraud and ERC Fraud Are On the Rise

Internal Revenue Service (IRS) investigations targeting Paycheck Protection Program (PPP) fraud and Employee Retention Credit (ERC) fraud are on the rise. Even though both of these pandemic-era programs ended several years ago, the IRS is continuing to aggressively pursue charges against businesses and business owners—and it has ramped up its efforts in recent months. Learn more from Virginia tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

Is Your Business at Risk (or Are You at Risk) of Facing an IRS PPP Fraud or ERC Fraud Investigation?

The IRS is currently targeting businesses and business owners for all forms of PPP fraud and ERC fraud. In recent investigations, we have seen the IRS’s Criminal Investigation division (IRS CI) pursue charges against entities and individuals accused of fraudulent practices including (but not limited to):

• Submitting fraudulent PPP loan applications (regardless of whether a loan was received)
• Submitting fraudulent ERC claims (regardless of whether these claims resulted in reduced tax liability or a refund)
• Generating fraudulent business records (i.e., payroll records) to support fraudulent PPP loan applications and ERC claims
• Improperly calculating the ERC (i.e., using credit percentages that applied during previous calendar quarters)
• Claiming the ERC for non-qualifying wages or non-qualifying employees (including non-existent employees)
• Fraudulently certifying compliance with the terms of the PPP in order to secure loan forgiveness (including fraudulently claiming to have used PPP loan proceeds only for qualifying business purposes)
• Making false statements to loan officers, IRS agents or personnel at the U.S. Small Business Administration (SBA)

PPP fraud and ERC fraud allegations can take many other forms as well. In all cases, allegations of intentionally defrauding (or attempting to defraud) federal programs like the PPP and ERC can lead to serious federal charges that carry both fines and prison time.

What New York Business Owners Should Do If They Have Questions or Concerns

In light of the IRS’ continuing efforts to target PPP fraud and ERC fraud, business owners who have questions or concerns about their efforts to leverage these pandemic-era programs should consult with experienced counsel promptly. While there are options for proactively resolving these types of issues with the IRS, these options go away once the IRS initiates an audit or opens an investigation.

In this same vein, business owners who have been contacted by the IRS in relation to their PPP loan applications or ERC filings need to engage experienced counsel immediately. Defending against allegations of PPP fraud or ERC fraud requires an informed and strategic defense. An experienced Virginia tax lawyer should be able to work quickly to assess the allegations at issue and then build and execute a custom-tailored defense strategy focused on helping you avoid unnecessary consequences.

Need Advice? Contact Virginia Tax Lawyer Kevin E. Thorn for a Confidential Consultation

If you were contacted by the IRS via letter or otherwise, call Kevin E. Thorn, Managing Partner of the Thorn Law Group, at 703-752-3752 or contact us confidentially online today. Thorn Law Group’s Virginia office is located at 1934 Old Gallows Road, Suite 350, Tysons Corner, VA 22182.