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IRS CI Continues To Target PPP Loan Fraud in 2023

Articles/News, Offshore Account Update

Posted on January 20, 2023 |

While it has been more than a year and a half since the Paycheck Protection Program (PPP) ended, the program is still making headlines. The PPP initially made headlines due to the unprecedented pace of its rollout and its positive impacts on the country’s struggling economy at the height of the COVID-19 pandemic. But, in 2023 it is making headlines for an entirely different reason.

Take, for example, a recent NPR headline that called the PPP an $800 billion “free-for-all.”

In the nineteen-plus months since the PPP application window closed, reports of fraud have become commonplace. As we reported last year, more than 10 percent of all applications have since shown “signs of possible fraud.” This translates to an estimated $74 billion (or more) of the $800 billion in government-backed forgivable loans issued under the program.

IRS CI is Targeting PPP Loan Recipients for Application and Certification Fraud

Media outlets aren’t the only ones taking notice. The IRS’s Criminal Investigation division (IRS CI) has been active in targeting PPP loan recipients since shortly after the program’s launch—and it is continuing these efforts in 2023. Through the first two weeks of January, IRS CI has already issued multiple press releases discussing separate PPP loan fraud investigations.

These (and other) recent federal investigations targeting PPP loan recipients have focused on two distinct types of fraud:

  • PPP Loan Application Fraud – Several investigations have focused on individuals’ and businesses’ efforts to obtain PPP loans for which they did not qualify. This includes efforts such as inflating payroll numbers, forming new business entities, falsifying personnel records and altering tax returns. Investigations have shown that many issuing banks did far too little to verify applicants’ eligibility, but this does not excuse those who received loans to which they were not entitled.
  • PPP Loan Forgiveness Certification Fraud – IRS CI is also pursuing investigations into companies and individuals that are accused of submitting fraudulent forgiveness certifications. While PPP loans are forgivable, they are only forgivable when recipients meet the program’s requirements. The submission of fraudulent forgiveness certifications (i.e., certifying that PPP loan funds were used exclusively for payroll and other eligible business expenses when this is not the case) is leading to criminal charges in many cases.

EIDL Fraud Remains a Top Enforcement Priority in 2023 As Well

Along with PPP loan fraud, IRS CI is continuing to target Economic Injury Disaster Loan (EIDL) fraud in 2023 as well. The EIDL was another pandemic relief program that provided loans to qualifying businesses and non-profit organizations. Investigations have shown that the EIDL also suffered from a high rate of fraud, and while many people have now put the pandemic in their rear-view mirror, IRS CI is still very much focused on the past.

Contact Federal Tax Defense Lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group

If you or your business is under investigation by IRS CI (or if you are concerned about a possible investigation), it is important that you speak with a lawyer immediately. To request a confidential consultation with federal tax defense lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group in Boston, please call 617-692-2989, email ket@thornlawgroup.com or contact us confidentially online today.

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