IRS Watchdog Thwarts $3.5 Billion in Potential Covid Fraud Scam

The Treasury Inspector General for Tax Administration tipped off the IRS to a $3.5 billion potential pandemic relief fraud scheme, the watchdog said Wednesday.

Individuals were using Employer Identification Numbers to file business returns and claim the employee retention credit and sick and family leave credits, though showing no signs that the business was operating, TIGTA said. IRS officials “put controls in place” to prevent similar schemes after TIGTA notified the agency.

The employee retention credit and sick and family leave credits were created to help businesses keep employees on the payroll during the pandemic. In recent months, ERC has ...