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In May, the Treasury Secretary announced that all SBA PPP Loans of over $2 million will be audited, and all loans under that amount may also be subject to an IRS audit. In the article below, John Milikowsky, the founder of Milikowsky Tax Law, breaks down what you can do right now to limit your risk of an IRS audit. The main takeaway is to get your financials in order right now. If you can track all of your expenses and prove where you allocated your funds, you’re already in great shape. Already applied for your SBA PPP loan? Download our TGG PPP Loan Forgiveness Tracker. Need a more in-depth look into your financials? Contact our team to help your business through this uncertain time.
Read the Milikowsky Tax Law Article here:
Now that business owners have received their funding from the SBA Payroll Protection Program (PPP), the government is beginning the process of vetting the hundreds of thousands of loan recipients to root out fraud.
The SBA has published guidelines with certain fraud indicators, following are factors business owners should be aware of:
There was an article in USA Today outlining one of the first cases against small businesses who received SBA PPP funds under fraudulent circumstances.
Two businessmen from RI received PPP loans amounting to nearly $544,000. They claimed to have dozens of employees earning wages at four different entities when, in fact, there were no employees working for any of the businesses. According to court documents the pair applied for loans for businesses that were not operating prior to the start of the COVID-19 pandemic and had no salaried employees. In one instance, a loan was sought for a Rhode Island restaurant the applicant did not own.
This is a glaring example of so many of the points highlighted above. For most business owners, the potential for audit lies in more subtle discrepancies. So, as you reconcile 2019 taxes with your financials, make sure that there are no glaring discrepancies. If you find areas where the information does not match, reach out to a tax attorney or a CPA and have us review your business financials.
At Milikowsky Tax Law, we review our clients business financial and provide civil and criminal tax representation. Our experienced team has helped over 400 business owners in audits and investigations with government entities. Our civil and Criminal Tax representation is second to none.
Call us for a free assessment to see if we can help you mitigate risk of an SBA audit.
This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.
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