In a June 20, 2024, News Release, the Internal Revenue Service (IRS) confirmed that it has uncovered an “extremely high rate” of improper claims under the Employee Retention Credit (ERC) program. While the ERC was a pandemic-era relief program, it remained open until late last year (when the IRS imposed a moratorium on new filings due to fraud-related concerns), and the IRS now believes that the “vast majority” of claims filed under the program may be fraudulent. New Jersey IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains what this means for business owners in the Garden State:

The Internal Revenue Service (IRS) is continuing to scrutinize employee retention credit (ERC) claims for signs of fraud, and it is taking its time to do so. However, this isn’t necessarily by choice, as the IRS recently disclosed that it is in the process of reviewing most of the remaining 1.4 million ERC claims manually because its “aged” system for digitizing paper returns cannot adequately assess signs of fraud. What does this mean if your business’s ERC claim is still pending? New Jersey tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, explains:

Criminal tax audits present substantial risks for both individual and corporate taxpayers. While taxpayers can effectively mitigate these risks with the right approach, they can also make their situation much worse than it needs to be if they aren’t careful. Learn about five critical mistakes to avoid during an IRS criminal tax audit from New Jersey criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.

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.

Federal tax audits present risks for companies of all sizes. Not only can audits lead to liability for back taxes and interest (which begins to accrue immediately), but the IRS imposes various penalties for income and employment-related tax violations as well. As most of these penalties are percentage-based—up to 75 percent in cases of fraud—all companies can face penalties that have a major impact on their bottom line. This makes it essential to hire an experienced New Jersey business tax attorney when facing scrutiny from the IRS. Learn more from Kevin E. Thorn, Managing Partner of Thorn Law Group: