Can the IRS Still Pursue PPP and ERC Audits in 2026?

The Paycheck Protection Program (PPP) closed in 2021, and the Internal Revenue Service (IRS) stopped accepting retroactive Employee Retention Credit (ERC) claims on Tax Day last year. With this being the case, can the IRS still pursue PPP and ERC audits in 2026? The answer to this question is a clear “Yes,” and the IRS is continuing to aggressively target PPP and ERC fraud alongside the U.S. Department of Justice (DOJ). Learn more from New Jersey criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

PPP and ERC Audits Can Present Substantial Risks for Individuals and Companies

Although it has been several years since the end of the COVID-19 pandemic, the IRS continues to target individuals and businesses suspected of committing PPP and ERC fraud. Recent audits have targeted all forms of fraud under these programs, including (but not limited to):

PPP Fraud

• Submitting fraudulent loan applications
• Using falsified records to substantiate loan applications
• Obtaining loans for non-qualifying (or non-existent) businesses
• Using loan funds for unauthorized purposes
• Submitting fraudulent loan forgiveness certifications

ERC Fraud

• Using falsified payroll data to substantiate credit claims
• Claiming tax credits for non-qualifying (or non-existent) businesses
• Claiming tax credits for non-qualifying wages
• Claiming the same tax credit every quarter
• Improperly calculating tax credits

These issues, among others, can expose individuals and businesses to substantial liability. This includes not only civil liability for back taxes, interest, and penalties, but also criminal liability in cases involving intentional fraud. If the IRS uncovers evidence (or apparent evidence) of intentional PPP fraud or ERC fraud during an audit, it can refer the case to the DOJ for possible criminal prosecution. In criminal cases, individuals and businesses can face charges for mail fraud, wire fraud, tax fraud, money laundering, and other serious federal crimes.

Mitigating Risk During an IRS Audit Targeting PPP Fraud or ERC Fraud

With these risks in mind, individuals and businesses facing PPP- and ERC-related audits in 2026 need to prioritize their defense. They need to protect themselves by all available means and focus on a resolution that avoids unnecessary consequences.

This starts with engaging experienced defense counsel.

From reviewing and protecting relevant records to communicating with the IRS, experienced defense counsel can assist with all aspects of responding effectively to a PPP or ERC audit. Experienced defense counsel will also be able to help targeted individuals and businesses make informed decisions, including whether to pursue a settlement or fight to avoid liability entirely.

Schedule a Confidential Consultation with New Jersey Criminal Tax Lawyer Kevin E. Thorn

If you need experienced defense counsel for a PPP or ERC audit in New Jersey, we encourage you to contact us promptly. To schedule a confidential consultation with New Jersey criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, as soon as possible, call 201-842-7696 or tell us how we can reach you online now.