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What Types of PPP and ERC Fraud is IRS CI Investigating? 2023 Update

News, Offshore Account Update

Posted in on July 17, 2023

Fraud under the Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) program has cost the federal government hundreds of billions of dollars. While these programs were intended to help businesses struggling during the COVID-19 pandemic, investigations have revealed that they quickly became prime targets for fraud.

Potential Federal Criminal Allegations in PPP and ERC Fraud Investigations

IRS Criminal Investigation (IRS CI) is actively investigating PPP and ERC fraud in 2023. It is targeting businesses and individuals for all forms of fraud, from submitting false payroll records in support of PPP loan applications to fraudulently claiming ERC credits and certifying for PPP loan forgiveness. Here are some examples of the types of allegations that are leading to charges for making false statements to the IRS, making false statements to banks, wire fraud, conspiracy and other serious federal offenses:

Submitting False Payroll Data

One of the most common allegations in PPP loan fraud investigations involves submitting false payroll data in support of PPP loan applications. Several individuals and businesses have been prosecuted for inflating or fabricating payroll figures in order to obtain government-backed forgivable loans.

Falsifying Tax Returns and Other Documents

Along with submitting false payroll data, submitting falsified tax returns and other forms of documentation is a common allegation in PPP loan fraud investigations (and ERC refund fraud investigations) as well.

Otherwise Misrepresenting PPP or ERC Eligibility

For many businesses determining their PPP or ERC eligibility was not easy. However, this is not an excuse for improperly claiming government benefits, and those accused of intentionally misrepresenting their eligibility can face criminal allegations.

Fraudulently Certifying Authorized Use of PPP Loan Funds

To have their PPP loans forgiven, businesses must certify that they only used their PPP loan proceeds for authorized purposes. IRS CI is targeting businesses and business owners for forgiveness certification fraud in many cases.

Claiming the ERC for Non-Qualified Wages

Under the ERC, not all wages qualify for a refundable credit. Claiming the ERC for non-qualified wages is a common allegation in ERC fraud investigations. While business owners that inadvertently claimed the ERC for non-qualified wages should not be at risk for criminal prosecution, due to IRS CI’s focus on ERC fraud, all business owners targeted in ERC-related audits and investigations must be prepared to defend against serious allegations of fraud.

Making False Representations to the IRS or IRS CI

When facing audits and investigations, business owners and other taxpayers must be extremely careful to avoid making false representations. Along with making false statements on PPP loan applications, PPP loan certification forms and business tax returns, IRS CI is pursuing charges for making false representations during audits and investigations as well.

Request a Consultation with Virginia PPP and ERC Fraud Attorney Kevin E. Thorn

PPP and ERC fraud investigations present substantial risks, and those targeted in these investigations need to engage experienced defense counsel immediately. To request an appointment with attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, call 703-752-3752 or contact us confidentially online today.

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