Business owners who received PPP funds are largely through the period in which they used those funds to cover payroll and other business operating expenses.  If you applied for, received, and have used your PPP funds, likely, you are readying to ask for forgiveness.

The SBA and the chairman of the Fed, Steve Mnuchin, have announced that they will be auditing all PPP loan recipients of over $2M.  If you received significantly less, that does not mean you are not at risk of an audit.

According to the False Claims Act, if your business submits false information in connection with the receipt of government funds you are liable for double the government’s damages plus a penalty of $2,000 for each false claim.  The FCA has since its inception, been amended several times and now provides that violators are liable for triple damages plus a penalty that is linked to inflation.

A careful examination of the records  you submitted to obtain the PPP loan is in order.  Did you incorrectly report revenue, employee count or any other information? If so, you may have exposed your business to criminal liability.

What is the False Claims Act?

The FCA is the driver behind many government fraud investigations. Under the FCA, it is unlawful to make materially false claims or false statements in connection with the receipt of funding through government programs. Any businesses that have filed for the PPP loan must be made aware of the fact that auditors are on high alert for any mistakes you may have made during the application process or in the use of your loan.

While the Fed has stated they are specifically auditing loans of $2M and greater,  cases are beginning to surface around fraudulent loans of  half-million dollars and more. Special inspectors for pandemic recovery are searching for the “making, purchase, management and sale” of all PPP loans.

As you examine your forgiveness documents, compare them to your SBA PPP Loan application. If you find discrepancies, reach out to a qualified attorney immediately.  Reviewing your records before an investigation can resolve any questions SBA may have about your loan application, funds usage or business operations quickly and with authority.  Waiting to be flagged may increase your risk of penalties and further criminal exposure.

Contact Milikowsky Tax Law today, we have resolved over 300 cases for businesses in IRS, EDD, and other government audits and investigations.

 

 

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