IRS Continues to Aggressively Target PPP Fraud and ERC Fraud

The Internal Revenue Service (IRS) is continuing to aggressively target Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) fraud. PPP fraud and ERC fraud investigations can expose businesses and their owners to substantial risks—including risks for fines and prison time. Learn more from Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

Potential Allegations in IRS PPP and ERC Fraud Investigations

IRS investigations targeting PPP fraud and ERC fraud can involve a wide range of allegations. If you are facing scrutiny from the IRS—or if you are at risk of facing scrutiny from the IRS—knowing the specific allegations that could lead to civil enforcement or criminal prosecution will be critical for mounting a successful defense. Some examples of potential allegations in these investigations include:

PPP Fraud

• Submitting a Fraudulent PPP Loan Application – Submitting a fraudulent PPP loan application (i.e., applying for a PPP loan when your business wasn’t eligible to receive one) can trigger penalties even if your business didn’t receive a PPP loan.
• Submitting False Documents in Support of a PPP Loan Application – Businesses and their owners are also facing scrutiny related to submitting false payroll records and other false documents in support of their PPP loan applications
• Using PPP Loan Proceeds for Unauthorized Purposes – Under the terms of the PPP, using loan proceeds for any ineligible business costs or to cover personal expenses was strictly prohibited.
• Falsely Certifying Eligibility for Loan Forgiveness – Businesses and business owners that falsely certified eligibility for PPP loan forgiveness have also faced civil enforcement and criminal prosecution in many cases.

ERC Fraud

• Misrepresenting ERC Eligibility – Businesses that misrepresented their eligibility for the ERC can face serious charges for tax evasion and tax fraud, among other federal offenses.
• Claiming the ERC for Non-Qualified Wages – Only “qualified wages” were eligible for the ERC. As a result, claiming the ERC for non-qualified wages can be prosecuted as a form of fraud.
• Claiming the ERC for Ineligible (or Nonexistent) Employees – Several businesses have also faced IRS investigations targeting their submission of ERC claims for ineligible (and, in some cases, nonexistent) employees.
• Falsifying Payroll Records and Other Documents – Similar to PPP fraud investigations, falsifying business records (including payroll records) is a common allegation in ERC fraud investigations as well.

Again, these are just examples. Allegations of PPP fraud and ERC fraud can take many other forms as well. In all cases, PPP fraud and ERC fraud can present serious risks for businesses and their owners—and those who are facing scrutiny from the IRS should engage an experienced Washington D.C. tax lawyer promptly.

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

If you were contacted by the IRS via letter or otherwise, call Kevin E. Thorn, Managing Partner of the Thorn Law Group, at 202-349-4033 or request a confidential consultation online today. Thorn Law Group’s Washington D.C. offices are located at 1775 Eye Street, Suite 1150 and 888 16th Street Northwest, Suite 800, Washington D.C., 20006.