IRS PPP and ERC Investigations Are On the Rise

The Internal Revenue Service (IRS) is continuing to target businesses in Boston and throughout Massachusetts in investigations involving alleged fraud under pandemic-era programs. This specifically includes alleged fraud under the Paycheck Protection Program (PPP) and the Employee Retention Credit (ERC) program. Learn more from Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.

Pandemic-Era Fraud Remains a Top Enforcement Priority for the IRS

While it has been well over two years since the federal government ended the national health emergency related to the COVID-19 pandemic, combating pandemic-era fraud remains a top priority for the IRS. The IRS’ Criminal Investigation Division (IRS CI) continues to release several press releases announcing pandemic-related enforcement actions each month, and these are just examples of IRS CI’s ongoing investigations.

The majority of IRS CI’s investigations relate to alleged fraud under the PPP and the ERC. Here is a quick recap of what each of these programs offered during the COVID-19 pandemic:

• Paycheck Protection Program (PPP) – The PPP offered eligible businesses access to low-interest, government-backed loans to help cover their payroll expenses. As long as businesses could certify that they used their PPP funds for eligible costs, they were eligible to have their loans forgiven.
• Employee Retention Credit (ERC) – The ERC was a pandemic-era tax credit that was available to eligible businesses that paid qualified wages during the pandemic. Due to widespread fraud under the ERC, the IRS offered multiple options for correcting fraudulent filings. However, these options have long since expired.

Allegations of PPP fraud and ERC fraud can take many different forms. We have seen IRS CI pursue criminal investigations involving allegations, including:

• Submitting fraudulent PPP loan applications and fraudulently claiming the ERC
• Submitting forged or false documentation in support of PPP loan applications and ERC claims
• Using PPP loan funds for unauthorized purposes (including personal expenses and luxury items)
• Fraudulently certifying eligibility for PPP loan forgiveness
• Claiming the ERC for ineligible employees or non-qualifying wages
• Improperly calculating ERC amounts
• Making false statements to PPP lenders, the U.S. Small Business Administration (SBA) or IRS personnel

Even these are just examples. With this in mind, businesses that applied for PPP loans (whether they received loans or not) and those that claimed the ERC should work with experienced counsel to ensure that they are not at risk. If your business is at risk and has not yet faced an IRS investigation, proactively working to resolve the situation will almost certainly be the best approach. If you have been contacted by the IRS regarding your company’s PPP loan application or its ERC claims, you should consult with an experienced Boston tax lawyer right away.

Request a Confidential Consultation with Boston 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 617-692-2989 or request a confidential consultation online today. Thorn Law Group’s Boston office is located at 10 Post Office Square, 8th Floor, Boston, MA 02109.