New York Businesses Continue to Face IRS Scrutiny for PPP Fraud and ERC Fraud

The Internal Revenue Service (IRS) is continuing to prioritize investigations targeting fraud under the Paycheck Protection Program (PPP) and Employee Retention Credit (ERC). Earlier this year, the IRS issued a report in which it disclosed that it has launched investigations targeting an estimated $10 billion in PPP fraud and ERC fraud. Since then, we have seen an uptick in PPP and ERC-related enforcement activity. Learn more from New York tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

The IRS is Targeting All Forms of PPP Fraud and ERC Fraud

The IRS’ Criminal Investigation Division (IRS CI) is actively targeting businesses in New York and nationwide for all forms of PPP fraud and ERC fraud. This includes common allegations such as:

• Fraudulent PPP Applications and ERC Claims – IRS CI is targeting businesses and business owners for submitting fraudulent PPP loan applications to lenders and submitting fraudulent ERC claims to the IRS.
• Fraudulent Supporting Documentation – IRS CI is also targeting businesses and business owners for using fraudulent documentation to support PPP loan applications and ERC claims. This includes, but is not limited to, generating false payroll records that contain inflated payroll figures or reference non-existent employees.
• Improper Calculation of Employee Retention Credits – In ERC fraud cases, IRS CI is pursuing investigations related to the improper calculation of credit amounts. This includes, but is not limited to, claiming the ERC for non-qualifying wages.
• Fraudulent Certifications for PPP Loan Forgiveness – In PPP fraud cases, IRS CI is pursuing investigations related to businesses’ certifications for loan forgiveness. This includes, but is not limited to, investigations related to the improper use of PPP loan funds.
• Making False Statements to Lenders or Federal Agents – Along with targeting businesses and business owners for submitting fraudulent documents, IRS CI is also pursuing investigations involving false statements made to lenders and federal agents at the IRS and the U.S. Small Business Administration (SBA).

To be clear, these are just examples. IRS CI is targeting businesses and business owners for a wide range of other PPP and ERC-related offenses as well—and all of these offenses carry substantial penalties under federal law.

PPP Fraud and ERC Fraud Allegations Can Lead to Serious Federal Charges

When IRS CI uncovers evidence of PPP fraud or ERC fraud, it works alongside the U.S. Department of Justice (DOJ) to pursue charges in federal court. In PPP fraud and ERC fraud cases prosecuted to date, the DOJ has filed charges, including:

• Bank fraud
• Money laundering
• Tax evasion and tax fraud
• Wire fraud
• Attempt, conspiracy and other related offenses

These are also just examples. If you need to know more about the IRS’s ongoing efforts to target PPP fraud or ERC fraud in New York, we strongly recommend consulting with an experienced New York tax lawyer as soon as possible.

Schedule a Confidential Consultation with New York 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 914-534-6004 or request a confidential consultation online today. Thorn Law Group’s New York office is located at 69 State Street, Albany, NY 12207.