IRS and DOJ Continue to Target PPP and ERC Fraud in 2026

The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) are continuing to target pandemic-era fraud in 2026. This includes fraud under the Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) program. Learn what business owners in Massachusetts need to know from experienced Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

The IRS and DOJ Are Targeting All Forms of PPP and ERC Fraud

Even though the PPP and ERC have both been closed for several years, the IRS and DOJ are continuing to target all forms of fraud under these pandemic-era programs. Agents and prosecutors are targeting not only businesses and business owners (and other individuals) who improperly obtained loans and tax credits under these programs, but also those who filed unsuccessfully. This means that audits and investigations targeting PPP and ERC fraud can lead to allegations including (but not limited to):

• Fraudulently applying for PPP loans
• Fraudulently obtaining multiple PPP loans
• Using PPP loan funds for non-qualifying purchases
• Falsely certifying eligibility for PPP loan forgiveness
• Fraudulently claiming ERC tax credits
• Misrepresenting gross wages or other employee data to the IRS
• Assisting businesses or individuals with submitting fraudulent PPP or ERC claims

These allegations, among others, can lead to either civil or criminal exposure, depending on the circumstances. The IRS is seeking to hold taxpayers civilly liable through audits, tax liens, and other enforcement measures, while the DOJ is pursuing criminal charges when warranted.

PPP and ERC Fraud Allegations Can Lead to Substantial Liability (and the Possibility of Prison Time)

In both civil and criminal enforcement cases, allegations of PPP and ERC fraud can lead to substantial liability. Businesses and individuals found civilly liable for improperly obtaining PPP loans, PPP loan forgiveness, or ERC tax credits can face liability for back taxes, interest, and IRS penalties. In criminal cases, businesses and individuals can face a host of federal charges, which carry the potential for both criminal fines and federal imprisonment.

Business Owners and Others Who Have Concerns Should Take Proactive Steps to Mitigate Their Exposure

For business owners and other individuals who have concerns about facing civil or criminal scrutiny related to their PPP loan applications or ERC filings, taking a proactive approach can help mitigate their risk. In some cases, this may involve coming forward under the IRS CI’s Voluntary Disclosure Practice. In others, it may involve proactively engaging with the IRS or DOJ to pursue a settlement that avoids civil or criminal enforcement. In all cases, prompt action is critical, as options for securing a favorable resolution can go off the table once an audit or investigation is underway.

Request a Confidential Consultation with Boston Tax Lawyer Kevin E. Thorn

If you need more information about options to mitigate your risk of facing allegations of PPP or ERC fraud in 2026, we invite you to get in touch. To request a confidential consultation with Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 617-692-2989 or contact us confidentially online today.