The IRS warned Wednesday that anyone who cheated the government on pandemic loans still must pay taxes on the fraud-based income or else face the wrath of the taxman.
That applies to anyone who got a Paycheck Protection Program (PPP) loan then got the government to forgive the loan based false representations.
In some cases, they only qualified for the loan because of their lies and omissions, while in other cases they may have properly qualified for the loan but then spent the money on things that went beyond what was allowable under the law, the IRS said.
Commissioner Chuck Retig said the warning is part of the IRS’ goal to make sure that “all taxpayers are paying their fair share of taxes.”
“We want to make sure that those who are abusing such programs are held accountable, and we will be considering all available treatment and penalty streams to address the abuses,” he said in a statement.
The federal government regularly uses the IRS as a double-whammy against criminals, requiring that they pay taxes even on money they stole, such as through embezzling an employer, selling drugs or looting an electronics store during a riot.
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The PPP spent $835 billion on loans to prop up smaller businesses during the early days of pandemic shutdowns. The goal was to keep businesses afloat and workers on payrolls even as their doors were shuttered, acting as a bridge until they could reopen.
Those who spent the money on approved needs could then get Uncle Sam to forgive the loans.
Acceptable costs were things like payroll, rent and utilities.
The IRS said loans were forgiven based on attestations businesses made about how they spent the money. But if they lied and were paid out based on those lies, they owe Uncle Sam for the ill-gotten income.
“If the conditions are not met, then the amount of the loan proceeds that were forgiven but do not meet the conditions must be included in income and any additional income tax must be paid,” the agency said.
The government is still working up estimates for how much PPP money went to fraudsters, though early guesses run to a minimum in the tens of billions of dollars.
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In the pandemic’s enhanced unemployment benefit program, which spent $718 billion, fraud estimates run into the hundreds of billions of dollars, with much of that going overseas, including to criminal syndicates associated with America’s adversaries such as Iran and Russia.
For more information, visit The Washington Times COVID-19 resource page.