PPP Fraud and ERC Fraud Remain Top IRS Enforcement Priorities

While the COVID-19 pandemic may be a thing of the past, the Internal Revenue Service (IRS) is continuing to target businesses and business owners suspected of engaging in fraud under pandemic-era programs. This includes fraud under the Paycheck Protection Program (PPP) and the Employee Retention Credit (ERC) program—both of which were intended to help struggling businesses keep their employees on staff during lockdowns. Learn what business owners need to know about facing allegations of pandemic-era fraud in 2025 from Maryland tax lawyer Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors.

The IRS is Targeting Businesses and Business Owners for All Forms of PPP Fraud and ERC Fraud

The IRS is targeting businesses and business owners for all forms of PPP and ERC fraud. While businesses and business owners are facing IRS audits in some cases, IRS Criminal Investigation (IRS CI) is also working with the U.S. Department of Justice (DOJ) to pursue criminal charges when warranted. Some examples of PPP fraud allegations that can lead to criminal charges include:

• Submitting a fraudulent PPP loan application (regardless of whether a loan was disbursed)
• Submitting false payroll records or other documentation in support of a PPP loan application (regardless of whether a loan was disbursed)
• Making false statements to lenders or the U.S. Small Business Administration (SBA)
• Using PPP loan proceeds for unauthorized purposes
• Falsely certifying PPP compliance in order to secure loan forgiveness

Some examples of ERC fraud allegations that can lead to criminal charges include:

• Claiming the ERC for a non-qualifying (or non-existent) business
• Claiming the ERC for non-qualifying (or non-existent) employees
• Claiming the ERC for non-qualifying wages
• Using false payroll records or other documentation to support an ERC claim
• Making false statements to IRS revenue agents or investigators regarding an ERC claim

These really are just examples. Any false representations, statements or filings related to the PPP or ERC can expose businesses and their owners to substantial penalties. IRS CI and the DOJ are pursuing charges for tax evasion, tax fraud, bank fraud, wire fraud, money laundering and a wide range of other federal offenses in these cases—and all of these charges carry substantial fines and federal prison time.

With this in mind, business owners who have concerns about their PPP or ERC filings should consult with an experienced Maryland tax lawyer promptly—and those who are already facing scrutiny from the IRS (or IRS CI) need to act immediately. While targeted businesses and business owners may have a variety of defense strategies available, executing these defense strategies effectively will require a proactive approach and highly experienced legal representation.

Request a Call with Maryland Tax Lawyer Kevin E. Thorn Today

If you were contacted by the IRS via letter or otherwise, call Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors, at 240-235-5096 or request an appointment online today. U.S. International Tax Advisors’ Maryland office is located at 21 Church Street, Suite 202 B, Rockville, MD 20850.