IRS and DOJ Continue to Target PPP and ERC Fraud in New Jersey

Articles/News, Offshore Account Update

Posted on May 17, 2024 |

The Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) are continuing to target PPP and ERC fraud in New Jersey. While the paycheck protection program (PPP) and employee retention credit (ERC) were intended as pandemic-era relief programs, widespread fraud under both of these programs has forced the IRS and DOJ to take aggressive action to recover fraudulent taxpayer losses. To date, the IRS and DOJ have conducted more than 1,600 investigations resulting in nearly 400 sentences—with a 98.5 percent conviction rate in prosecuted cases. But, as New Jersey tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains, this is almost certainly just the beginning.

Recent IRS News Release Touts Ongoing PPP and ERC Fraud Enforcement Efforts

In a recent News Release, the IRS announced that more than half of all PPP and ERC fraud investigations to date have been initiated in just the past 12 months. The News Release also highlights the IRS’ ongoing collaboration with the DOJ to pursue criminal charges for PPP and ERC fraud. As a result—and with an estimated $2 trillion in total fraud under the ERC alone—we expect to see many more PPP and ERC-related investigations throughout the remainder of 2024 and beyond.

IRS and DOJ Spotlight Pandemic-Related Enforcement Efforts in New Jersey  

The DOJ also recently issued a Press Release highlighting its efforts to target pandemic-related fraud in New Jersey specifically. In the Press Release, which was issued on April 3, 2024, the DOJ states that a New Jersey tax preparer is facing multiple federal charges based on allegations that he filed more than 1,600 false returns in order to obtain fraudulent employee retention credits for himself and his clients. If convicted, the tax preparer faces millions of dollars in fines and decades of federal imprisonment.

Notably, this isn’t the first time the federal government has highlighted its efforts to target pandemic-related fraud in New Jersey. In 2022, the IRS announced the arrests of six New Jersey residents who were accused of submitting multiple fraudulent PPP loan applications. In that case, the defendants also faced multiple charges carrying similar penalties. When the DOJ and IRS highlight multiple cases such as these, this usually means that they are prioritizing enforcement in a particular area.

Avoiding Prosecution for PPP and ERC Fraud in New Jersey

If you have concerns about facing prosecution for PPP fraud or ERC fraud in New Jersey, what does all of this mean for you?

If it is not too late to do so, you should address your concerns proactively. If the IRS and DOJ are not yet looking into your PPP or ERC filings, your best option may be to submit a voluntary disclosure.

If you are under investigation, submitting a voluntary disclosure is no longer on the table. In this scenario, you will need to engage an experienced New Jersey tax lawyer to deal with the IRS and DOJ on your behalf. While you may still be able to avoid prosecution, doing so will require a strategic and proactive approach—and you will not want to wait any longer than necessary to start building your defense.

Schedule an Appointment with New Jersey Tax Lawyer Kevin E. Thorn

If you need to know more about mitigating your risk of facing criminal charges involving PPP or ERC fraud, we encourage you to contact us promptly. Call 201-842-7696 or contact us confidentially online to schedule an appointment with New Jersey tax lawyer Kevin E. Thorn today.

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