Pandemic Fraud Remains a Top Priority for IRS CI

Prosecuting individuals and companies suspected of fraudulently obtaining PPP and EIDLP loans, tax credits, and other forms of COVID-19 relief remain a top priority for the Internal Revenue Service’s Criminal Investigation Division (IRS CI). IRS CI regularly publishes press releases highlighting its enforcement efforts, and it has made clear that prosecuting pandemic-related fraud will continue as an area of emphasis for the foreseeable future.

As Virginia tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains, “In pandemic-related cases, IRS CI isn’t just targeting allegations of tax fraud and tax evasion. We have seen investigations result in a wide range of charges, and in many cases IRS CI is working with other federal authorities to orchestrate large-scale takedowns.”

IRS CI: COVID-19 Fraud has Cost the Federal Government More Than $1.8 Billion

On March 23, 2022, IRS CI reported that the federal government has suffered more than $1.8 billion in losses due to pandemic-related fraud. According to IRS CI, the agency has, “investigated 660 tax and money laundering cases related to COVID fraud . . . [with] a 100% conviction rate for prosecuted cases with prison sentences averaging 42 months.”

A significant percentage of these cases have involved efforts (both successful and unsuccessful) to fraudulently obtain government-backed loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDLP). IRS CI has targeted individuals and businesses accused of submitting fraudulent applications for loans ranging from tens of thousands to tens of millions of dollars.

Most of these cases have involved the same basic fact pattern. Applicants typically create fictitious businesses or submit loan applications on behalf of nonoperational business entities. In doing so, they represent that these businesses have employees and payroll expenses, and they submit falsified reports, tax records, and other documents in support of these representations. When IRS CI discovers the fraud, it pursues charges for conspiracy, bank fraud and other crimes; and, upon conviction, targeted individuals are held liable for restitution while facing several months or years behind bars.

However, not all cases involve intentional fraud. In many cases, individuals and businesses are facing prosecution for unknowingly violating the terms of the PPP or EIDLP. This includes inadvertently submitting inaccurate information in support of loan applications, using loan proceeds for unauthorized purposes and submitting invalid certifications for loan forgiveness.

Defending Against Allegations of Pandemic-Related Fraud

Whether accused of fraudulently obtaining COVID-19 relief funds under the Coronavirus Aid, Relief, and Economic Security (CARES) Act or fraudulently claiming tax credits under the American Rescue Plan Act, individuals and businesses facing IRS CI scrutiny need to defend themselves by all means available. While IRS CI may have a 100% conviction rate, defenses are available, and individuals and companies can protect themselves by engaging experienced defense counsel.

Request a Consultation with Virginia Tax Lawyer Kevin E. Thorn

Whether you are under investigation for pandemic-related fraud or you are seeking to avoid IRS CI scrutiny, the lawyers at Thorn Law Group can help. To request a consultation with Virginia tax lawyer and Managing Partner Kevin E. Thorn, please call 703-752-3752, email ket@thornlawgroup.com or contact us confidentially online today.