IRS ERC and PPP Fraud Investigations: What New Jersey Business Owners Need to Know in 2025

Business owners in New Jersey remain at risk of facing Internal Revenue Service (IRS) investigations related to the Paycheck Protection Program (PPP) and Employee Retention Credit (ERC). While both of these pandemic-era programs expired years ago, the IRS has made clear that it is continuing to prioritize PPP and ERC-related enforcement in 2025. Learn more from New Jersey tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

Why the IRS is Continuing to Target Pandemic-Era Fraud in 2025

While the PPP and ERC both served as financial lifelines to many businesses during the COVID-19 pandemic, they were also prime targets for fraud. Earlier this year, the IRS reported that it had already initiated enforcement actions involving $10 billion in pandemic-era fraud.

According to some estimates, this could just be a small fraction of the total fraud perpetrated under the PPP and ERC.

Given that this is the case, the IRS is continuing to prioritize PPP fraud and ERC fraud investigations—and it is currently showing no signs of slowing down. As a result, business owners who have concerns (or don’t know whether they should have concerns) should consult with experienced tax counsel who can help them make informed decisions about how best to proceed.

Common Allegations in PPP Fraud and ERC Fraud Investigations

When should business owners have concerns? The IRS is pursuing a wide range of allegations in investigations targeting fraud under the PPP and ERC. These include (but are not limited to) allegations of:

• Submitting fraudulent PPP loan applications (regardless of whether loans were received)
• Falsifying payroll records or other documentation to support fraudulent PPP applications or ERC claims
• Claiming the ERC for ineligible businesses or non-qualified wages (including claiming the ERC for non-existing businesses or employees)
• Improperly calculating the ERC
• Using PPP loan funds for unauthorized purposes (including non-qualifying business expenses and personal expenses)
• Fraudulently certifying eligibility for PPP loan forgiveness
• Making false statements to lenders, the U.S. Small Business Administration (SBA) or the IRS

Again, these are just examples. PPP fraud and ERC fraud allegations can take many other forms as well. These allegations can lead to serious federal charges—and, in many cases, they already have.

Risks for Businesses and Business Owners Targeted By the IRS

Businesses and business owners targeted by the IRS for PPP fraud and ERC fraud can face substantial penalties. Potential charges in these cases include tax evasion, tax fraud, bank fraud, wire fraud, and money laundering—among others. All of these charges carry substantial fines under federal law, and business owners prosecuted for these crimes can face federal prison time as well.

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

If you were contacted by the IRS via letter or otherwise, call Kevin E. Thorn, Managing Partner of the Thorn Law Group, at 201-842-7696 or request a consultation online today. Thorn Law Group’s New Jersey office is located at 301 Route 17 North, Suite 800, Rutherford, NJ 07070.