Are You At Risk of Facing a PPP or ERC Fraud Audit or Investigation in 2026?

Due to widespread fraud during the COVID-19 pandemic, the federal government continues to pursue civil and criminal enforcement actions related to the Paycheck Protection Program (PPP) and the Employee Retention Credit (ERC). We continue to see the Internal Revenue Service (IRS) and the U.S. Department of Justice (DOJ) target businesses and individuals, and both have made clear that targeting pandemic-era fraud remains a top priority in 2026. Learn more from Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

Audits and Investigations Targeting PPP and ERC Fraud Can Involve a Wide Range of Allegations

Allegations of PPP and ERC fraud can take many different forms. In recent cases, we have seen the IRS and DOJ target allegations, including (but not limited to):

• Fraudulently Applying for PPP Loans – Both successfully and unsuccessfully filing fraudulent PPP loan applications can expose businesses, business owners, and other individuals to serious federal fraud allegations.
• Improperly Using PPP Loan Funds – Under the terms of the PPP, funds received under the program were allowed only for qualifying business purposes. Using PPP loan funds for unauthorized purposes also constitutes fraud.
• Falsely Certifying Eligibility for PPP Loan Forgiveness – Businesses and individuals that falsely certified they were eligible to have their PPP loans forgiven can face fraud allegations related to their false certifications as well.
• Fraudulently Claiming ERC Tax Credits – Misrepresenting payroll data, improperly calculating credits, and other means of improperly obtaining credits or refunds can all lead to serious fraud allegations under the ERC program.
• Assisting with the Submission of Fraudulent PPP and ERC Claims – Accountants and other individuals who assisted with the submission of fraudulent PPP and ERC claims are also at risk of facing scrutiny from the IRS and DOJ.

These allegations, among others, can lead to civil or criminal penalties. In criminal cases, business owners, accountants, and other individuals can face steep fines and federal prison time for tax fraud, bank fraud, wire fraud, conspiracy, and various other federal offenses.

What To Do if You Have Concerns About Facing IRS or DOJ Scrutiny

Due to the substantial risks involved, business owners and other individuals who have concerns about facing scrutiny regarding their PPP or ERC claims should consult experienced legal counsel promptly. If the IRS and DOJ have not yet taken action, coming forward proactively could be the best approach. However, when coming forward proactively, extreme caution is required. Voluntarily disclosing incriminating information without the necessary protections in place could lead to federal prosecution.

Request an Appointment with Washington D.C. Tax Lawyer Kevin E. Thorn

If you have concerns about facing PPP or ERC-related scrutiny in 2026, we encourage you to contact us promptly for more information. To request an appointment with Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, call 202-349-4033 or tell us how we can reach you online today.