More than two years after approving the IRS' “John Doe” summons targeting Kraken customers’ personal information and transaction data, a federal court has compelled Kraken to comply. While Kraken has disputed the IRS' authority to issue the summons, the court that initially authorized the summons in May of 2021 has now stated that Kraken must supply the requested information in order to avoid being held in contempt of court.

The Internal Revenue Service (IRS) is targeting businesses (and business owners) that fraudulently claimed the Employee Retention Credit (ERC). However, the IRS also acknowledges that many business owners unknowingly submitted invalid claims due to falling for fraudulent ERC filing promotion scams. As a result, it is now offering the opportunity for eligible businesses to withdraw their ERC claims before they trigger audits and investigations. Virginia tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains what business owners need to know:

The Employee Retention Credit (ERC) was an economic relief program made available to businesses impacted by the COVID-19 pandemic, and until recently, affected businesses could claim the credit retroactively. However, the Internal Revenue Service (IRS) has now placed a moratorium on new ERC claims as it investigates widespread fraud under the program. Virginia federal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains.

Among several other enforcement priorities, the Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) have been targeting “abusive trust tax evasion schemes” in 2023. Their focus on these schemes will likely continue into 2024 as well, and as a result, taxpayers and promoters of these schemes must be prepared to defend themselves if necessary.

With federal authorities continuing to investigate COVID-19 pandemic fraud in 2023, businesses that obtained Paycheck Protection Program (PPP) loans or claimed the Employee Retention Credit (ERC) are under the microscope. Authorities including IRS Criminal Investigation (IRS CI) are aggressively targeting businesses (and business owners and executives) in PPP fraud and ERC fraud investigations—and these investigations are leading to criminal indictments in some cases.