SBA Referral Leads IRS to Investigate Tax Liabilities Related To Potentially $100 Billion in COVID Loan Fraud

WASHINGTON — Today, the U.S. Small Business Administration (SBA) and the Internal Revenue Service (IRS) announced a new step in their joint efforts to address suspected pandemic relief fraud. Earlier this year, SBA referred more than $200 billion in suspected Paycheck Protection Program and COVID Economic Injury Disaster Loan (EIDL) fraud to the IRS. The IRS compared tax information borrowers provided to SBA when applying for pandemic relief loans with information reported to the IRS. The comparison identified discrepancies associated with approximately $100 billion in loans. The IRS has opened examinations of cases identified through its review to determine whether additional taxes and penalties apply, including penalties for fraud.

The more than $200 billion in potentially fraudulent pandemic-era PPP and COVID EIDL assistance was first estimated by the SBA Office of Inspector General in June 2023 during the Biden Administration. The OIG estimated that nearly 20% of the approximately $1.2 trillion disbursed through SBA’s pandemic-relief programs may have gone to potentially fraudulent actors.