In response to the soaring levels of federal investigations by the Internal Revenue Service and Department of Justice into alleged fraud perpetrated under the Employee Retention Credit program, Fox Rothschild has formed a multipractice team of seasoned trial lawyers to defend and educate clients on compliance with COVID-19 tax relief programs.
A joint initiative of the firm’s White-Collar Criminal Defense & Regulatory Compliance Practice Group and Tax Controversy & Litigation Practice Group, Fox Rothschild’s Employee Retention Credit Defense Task Force represents employers, accounting firms, tax planners, third-party marketers and other participants in the ERC program in connection with the often-daunting issues that arise with the refundable tax credit.
The Task Force is led by Matthew S. Adams and Matthew D. Lee, co-chairs of the firm’s White-Collar Criminal Defense & Regulatory Compliance Practice Group, and Brian C. Bernhardt, a partner in Fox’s Tax Controversy & Litigation Practice Group and a former IRS trial attorney.
“We’ve been monitoring the investigative and enforcement trends of the IRS and DOJ related to Covid-19-related economic stimulus for a while now, and generally speaking, based on our observations, the array of enforcement issues presented by the ERC may very well constitute one of the largest white-collar investigations in the history of the United States when all is said and done,” said Adams. “It has become apparent to us that clients would benefit from a focused service by our veteran team of attorneys who have extensive federal fraud defense and investigation experience,” he added.
“We created a nationwide tracker to monitor fraud prosecutions related to the full range of COVID-19 aid programs,” said Lee. “Through this research, we’ve observed trends and developments on issues, fact patterns and arguments to support and defend ERC claims and the employers, taxpayers and others involved in claiming the relief to which they are entitled.”
“By September 30 of this year, the IRS initiated more than 300 investigations involving in excess of $3.4 billion in ERC claims,” said Bernhardt. “By that same date, the IRS had investigated almost 1,500 cases of COVID-19 aid tax fraud, which resulted in 700 indictments and a conviction rate of over 98%, with an average sentence of 36 months. These trends show that anyone who claimed the ERC and wasn’t in fact entitled to it is at best facing a civil audit and could also be confronted with a criminal investigation.”
The members of the firm’s newly formed task force handle the full range of ERC-related matters, including advising employers on the correct procedure for fixing an overfunded credit before it is too late; reviewing third-party determinations of their credit amounts and assessing eligibility; counseling accounting firms and tax planners; and defending civil and criminal IRS and DOJ investigations of credit claims.
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