Facing IRS or DOJ Scrutiny for Pandemic-Era Fraud Remains a Concern in 2026

While the COVID-19 pandemic is fast becoming a distant memory, targeting pandemic-era fraud remains a top priority for the federal government in 2026. The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) are continuing to target all forms of pandemic-era fraud, including fraud under the Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) programs. Learn what business owners and others need to know about the risks of facing PPP or ERC-related scrutiny from Maryland tax lawyer Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors:

The IRS and DOJ Are Pursuing PPP and ERC Fraud Cases Domestically and Abroad

Even though it has been several years since the end of the pandemic, the IRS and DOJ are continuing to pursue PPP and ERC fraud cases domestically and abroad. In doing so, they are targeting businesses, business owners, and other individuals who are suspected of a wide range of fraudulent practices. These include (but are not limited to):

• Submitting false information or falsified records in support of PPP loan applications
• Using PPP loan funds for personal expenditures and other non-qualifying expenses
• Fraudulently certifying compliance with the PPP’s terms to secure loan forgiveness
• Claiming the ERC for non-existent businesses or employees
• Claiming the ERC for non-qualifying wages
• Submitting falsified payroll records to support fraudulent ERC claims
• Making false statements to financial institutions, the IRS or the U.S. Small Business Administration (SBA)

In addition to targeting PPP and ERC claimants, the IRS and DOJ are also targeting accountants and other individuals (who these agencies label as “promoters”) who are suspected of assisting with the submission of false and fraudulent claims. Under federal law, these individuals can face the same penalties as the businesses or individuals they assisted in many cases.

PPP and ERC Fraud Allegations Can Lead to Civil Penalties or Criminal Prosecution

Audits and investigations targeting suspected PPP or ERC fraud can present various risks. Depending on the specific allegations involved, civil or criminal penalties could be on the table. In criminal cases, federal prosecutors at the DOJ may be able to pursue charges, including:

• Bank fraud (18 U.S.C. Section 1344)
• Conspiracy (18 U.S.C. Section 371)
• False statements (18 U.S.C. Section 1001)
• Tax fraud (26 U.S.C. Section 7201)
• Wire fraud (18 U.S.C. Section 1343)

All of these charges carry steep fines and prison time. In civil enforcement cases, businesses and individuals can also face steep monetary penalties. Due to the risks involved, business owners and others who have concerns about facing PPP- or ERC-related scrutiny in 2026 should promptly discuss their options with experienced legal counsel.

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

If you need to know about your options for avoiding PPP or ERC-related scrutiny (or if you have been contacted by the IRS or DOJ), we strongly encourage you to contact us for a confidential consultation. To request a confidential consultation with Maryland tax lawyer Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors, please call 240-235-5096 or contact us online today.