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PPP and ERC Fraud: The IRS and DOJ are Targeting Massachusetts Businesses in Criminal Investigations

Offshore Account Update

Posted on May 17, 2024 |

The Internal Revenue Service (IRS) issued a News Release on March 28, 2024, discussing its latest efforts to combat paycheck protection program (PPP) and employee retention credit (ERC) fraud. This date was significant because it was the four-year anniversary of the CARES Act, which established both the PPP and the ERC. The IRS’ News Release makes clear that combating PPP and ERC fraud remains a top priority for both it and the U.S. Department of Justice (DOJ), and this makes it important for those who have concerns to speak with an experienced Boston tax lawyer promptly.

IRS: More Than Half of All PPP and ERC Enforcement Cases Were Opened in 2023 and 2024

In its News Release, the IRS highlights the fact that it has investigated more than 1,600 pandemic-related fraud cases involving an estimated $8.9 billion in fraudulent taxpayer losses, “with well over half that amount coming from cases opened in the last year.” It also makes clear that it is continuing to work closely with the DOJ to pursue criminal investigations targeting PPP and ERC fraud when warranted, noting that:

“[IRS Criminal Investigation’s (IRS CI)] ongoing fraud-protection work will be bolstered by the additional funding the IRS received through the Inflation Reduction Act, which is providing the agency with additional resources to ensure fair enforcement of the laws as well as improved taxpayer service, new technology and wider IRS transformation efforts.”

PPP fraud and ERC fraud investigations present substantial risks for Massachusetts business owners. The IRS’ News Release also highlights IRS CI’s “98.5% conviction rate” in pandemic-related fraud cases, with the DOJ routinely pursuing charges for tax evasion, money laundering, conspiracy, and other serious federal crimes.

Responding to a PPP or ERC Fraud Investigation in Massachusetts

With these risks in mind, business owners in Massachusetts who are facing PPP or ERC-related scrutiny from the IRS or DOJ must act quickly to protect themselves. When facing a federal criminal investigation, it is imperative to engage experienced defense counsel as soon as possible. These investigations can move surprisingly quickly, and with the IRS’ additional funding under the Inflation Reduction Act, not only is it enhancing its enforcement resources, but it is also implementing new technologies to more efficiently identify red flags for PPP and ERC fraud.

While targeted business owners will have opportunities to avoid criminal prosecution in many cases, leveraging these opportunities requires an informed, strategic and proactive defense. If you are facing an IRS or DOJ investigation in Massachusetts (or if you have concerns about facing an investigation), you should speak with an experienced tax lawyer right away.

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

Boston tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, relies on well over a decade of relevant experience to defend clients in high-stakes IRS and DOJ investigations. To request a confidential consultation with Mr. Thorn, please call 617-692-2989 or contact us confidentially online today.

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