IRS Examines Potential Frauds in COVID-19 Relief Employee Credit Programs

The IRS battles rising fraud concerns as COVID-19 tax relief programs, specifically the Employee Retention Credit (ERC), face scrutiny over false claims.

Key Insights

Candies Goode-McCoy of Nevada maneuvered nearly $100 million in fraudulent refunds.
Approximately 10-20% of ERC applications were designated as high risk.
The DOJ is investigating more than 450 criminal cases involving nearly $7 billion in potentially fraudulent claims.
Lawmakers have proposed repealing the ERC to prevent further abuses.

Fraudulent Actors in the Spotlight

Candies Goode-McCoy, a Nevada businesswoman, admitted guilt in a high-profile case involving nearly $100 million in COVID-19 tax credit fraud. The Department of Justice disclosed Goode-McCoy’s conspiracy to file fraudulent tax returns at a swift pace of up to 80 per month during the pandemic. Over a span of 16 months, Goode-McCoy and her associates generated over 1,200 false claims, yielding about $33 million from the IRS, of which she retained $1.3 million herself.

Despite the IRS’s intention to support struggling businesses with the ERC during the pandemic, some exploited the program. The fraudulent activities persisted as Goode-McCoy utilized funds for personal splurges on vacations and luxury items, aimed at lifestyle lavishness rather than enterprise sustenance. Her case underscores a pattern of misappropriation echoing similar events and highlights broader issues within pandemic relief programs.

Legislative Response to Mounting Fraud

Lawmakers introduced the Employee Retention Tax Credit Repeal Act, aiming to halt claim processing after January 31, 2024, while enhancing penalties for fraudulent acts. This legislative move intends to mitigate misuse within tax relief frameworks, reinforcing vigilant oversight. The compounded scrutiny and legal measures signify a robust governmental response to fiscal misappropriation.

The continued determination of the IRS and DOJ in tackling large-scale tax fraud is evident. Preventative measures and aggressive prosecution are crucial in restoring integrity to financial relief programs, a mission that resonates with the need for accountability in safeguarding taxpayer resources.