The IRS’ Office of Promoter Investigations is Aggressively Targeting ERC Fraud

The IRS’ Office of Promoter Investigations is focused on uncovering and prosecuting Employee Retention Credit (ERC) fraud in 2024. According to the IRS, its Office of Promoter Investigations “has received hundreds of referrals from internal and external sources,” and since the COVID-19 pandemic, the IRS has largely blamed promoters for the billions of dollars in fraudulent claims filed under the ERC program. Do you have concerns about facing an ERC-related investigation? If so, keep reading to learn more from Boston IRS attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.

IRS: Promoters Are Largely Responsible for Widespread ERC Fraud

While the IRS holds businesses responsible for the contents of their federal returns, the IRS also recognizes that business owners fall victim to fraudulent promotion schemes in some situations. In these cases, while the IRS still expects businesses to pay what they owe, the agency often focuses its enforcement efforts on the promoters that it believes are ultimately responsible for encouraging and facilitating widespread fraud.

This has certainly been the case with regard to ERC fraud.

When the IRS announced earlier this summer that it would restart processing “lower-risk claims to help eligible taxpayers,” it also made clear that it is continuing to prioritize ERC fraud enforcement. This includes specifically targeting individuals and firms suspected of promoting fraudulent ERC filing schemes. At the time, the IRS wrote:

“The IRS is gathering information about suspected abusive tax promoters and preparers improperly promoting the ability to claim the ERC. . . . The IRS will continue civil and criminal enforcement efforts of these unscrupulous promoters and preparers.”

Since then, we have seen several cases involving efforts to impose both civil and criminal penalties against alleged promoters. The IRS’ Office of Promoter Investigations has been heavily involved in these efforts, working with revenue agents, IRS Criminal Investigation (IRS CI), and the U.S. Department of Justice (DOJ) as warranted.

Like other offices within the IRS, the Office of Promoter Investigations has become heavily reliant on technology in recent years. Spurred by widespread fraud under the ERC and other pandemic-era programs, the IRS has sought out new ways to efficiently analyze large swaths of returns for potential signs of fraud. For the Office of Promoter Investigations, this includes using “new technology and data analytics to detect and combat sophisticated evasion techniques” that are indicative of fraudulent ERC promotion schemes. This approach has allowed the Office of Promoter Investigations to quickly initiate a large number of ERC-related investigations—and we expect that this number will continue to increase significantly throughout the remainder of 2024 and into 2025.

Contact Boston IRS Attorney Kevin E. Thorn in Confidence

Boston IRS attorney Kevin E. Thorn has extensive experience representing taxpayers and promoters in ERC-related audits and investigations. If you have been contacted by the Office of Promoter Investigations—or if you have concerns about being contacted—we encourage you to call 617-692-2989 or contact us online to arrange a confidential consultation.