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The IRS and DOJ are Targeting PPP and ERC Fraud with Criminal Investigations in Virginia

News, Offshore Account Update

Posted in on May 17, 2024

Paycheck protection program (PPP) and employee retention credit (ERC) fraud remain top law enforcement priorities for the federal government in 2024. The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) are actively targeting PPP applicants and ERC claimants, and the DOJ is pursuing serious criminal charges in many cases. With this in mind, business owners and other taxpayers who have concerns about their PPP or ERC filings should consult with an experienced Virginia tax attorney as soon as possible.

Understanding the Risks of an IRS or DOJ Investigation Targeting Pandemic-Related Fraud

Federal criminal investigations targeting PPP and ERC fraud present substantial risks. The IRS’s Criminal Investigation Division (IRS CI) is working alongside the DOJ to gather the evidence needed to substantiate charges for a wide range of offenses. These include (but are not limited to):

  • PPP Fraud – In PPP fraud cases, IRS CI and the DOJ are targeting violations such as submitting fraudulent PPP loan applications, submitting false payroll records or tax returns in support of PPP loan applications, using PPP funds for unauthorized purposes, and submitting fraudulent PPP loan forgiveness certifications.
  • ERC Fraud – In ERC fraud cases, IRS CI and the DOJ are targeting violations such as falsifying payroll records, submitting fraudulent ERC claims, and collecting fraudulent ERC refunds.

These violations (among others) can lead to multiple criminal charges under the Internal Revenue Code and other federal statutes. Some of the charges we have seen to date in PPP and ERC fraud cases include:

  • Attempt and conspiracy
  • Tax evasion and other tax crimes
  • Mail fraud and wire fraud
  • Money laundering
  • Bank fraud

With substantial (six or seven-figure) fines and federal prison time both on the table, business owners and other taxpayers targeted in PPP and ERC fraud investigations need to protect themselves by all means available. While it may be possible to avoid prosecution in many cases, doing so requires an informed and strategic approach guided by highly experienced tax counsel.

Are You At Risk of Facing a Criminal PPP or ERC Fraud Investigation in Virginia?

So, are you at risk? Given the IRS and DOJ’s ongoing efforts to prosecute PPP and ERC fraud, we are recommending that all PPP applicants and ERC claimants review their filings to re-assess their eligibility. If there are mistakes you need to address—and if it is not too late to do so proactively—submitting a voluntary disclosure could be your best option. But, if the IRS and DOJ are already looking into your filings, then voluntary disclosure is no longer an option, and you will need to work with your Virginia tax attorney to protect yourself by all means available.

Contact Us to Speak with Virginia Tax Attorney Kevin E. Thorn in Confidence

Do you need to know more about protecting yourself against PPP or ERC fraud allegations in Virginia? If so, we strongly encourage you to get in touch. To speak with Virginia tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, in confidence as soon as possible, call 703-752-3752 or tell us how we can reach you online now.

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