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.
“President Trump’s White House Task Force to Eliminate Fraud is exposing the industrial-scale theft that too often went unchecked during the pandemic and uninvestigated for years afterwards during the Biden Administration,” said SBA Administrator Kelly Loeffler. “For the first time, SBA, IRS, Treasury, DOJ, and federal law enforcement are collaborating across data and enforcement tools to follow fraudsters and uncover misconduct at scale. The IRS’s identification of approximately $100 billion in suspected tax fraud sends a clear message: fraudsters who stole from SBA’s COVID-relief programs will not only face accountability at the SBA. If they inflated payroll, fabricated employee counts, falsified business records, or otherwise lied to obtain taxpayer-funded loans, they will also face scrutiny from the IRS.”
“The IRS’s review of referrals by the SBA showed discrepancies involving $100 billion in loans,” said IRS Chief Executive Officer Frank J. Bisignano. “The IRS has opened investigations because of SBA’s referrals and will pursue penalties for tax fraud. We will continue working with the SBA, the White House Task Force to Eliminate Fraud under the leadership of the Vice President, and our federal law-enforcement partners to identify violations and pursue appropriate enforcement.”
The SBA and IRS are coordinating with the Department of the Treasury, SBA Office of Inspector General, Department of Justice, and other White House Fraud Task Force partners to identify suspected violations, recover taxpayer funds where appropriate, and pursue available administrative, civil, and criminal enforcement action.
This announcement builds on SBA’s broader effort to identify pandemic-era fraud, recover taxpayer money, and protect SBA programs for legitimate entrepreneurs. Earlier this month, SBA announced suspensions for 870,000 borrowers tied to an estimated $39 billion in suspected PPP and COVID EIDL fraud. Including prior actions, SBA has suspended approximately 1 million borrowers tied to about $49 billion in suspected pandemic-era fraud. Those borrowers are barred from future SBA lending and other SBA programs, including 8(a) federal contracting.
SBA has referred approximately $22 billion in suspected fraudulent pandemic-era PPP and COVID EIDL loans to the Department of the Treasury for collection. That Treasury referral concerns outstanding balances owed to the SBA by specific suspected fraudulent borrowers and is separate from the SBA referral to IRS for tax-fraud analysis.
Investigations into any additional tax liability related to the potential $100 billion in pandemic relief program fraud remain ongoing, and individual cases will be evaluated based on the facts and applicable law.
