Are You Under Investigation for Disaster Relief Tax Fraud?

When disaster strikes, the Internal Revenue Service (IRS) will often offer tax relief to individual and business taxpayers. This tax relief can take various forms, from delaying the due date for income tax filings (as in the case of the COVID-19 crisis) to providing additional deductions to taxpayers that experience casualty losses (as in the case of major storms). The U.S. Small Business Administration (SBA) offers disaster relief loans and grants in various circumstances as well—and the IRS is tasked with ensuring that taxpayers who receive federal funds pay all relevant taxes when they come due.

While these disaster relief programs are important, they are also ripe for fraud. Almost invariably, when the IRS or the SBA announces a major disaster relief program, fraud alerts soon follow. Unfortunately, the prevalence of disaster relief tax fraud means that many legitimate beneficiaries of these programs face scrutiny as well, and an IRS investigation is a matter that needs to be taken very seriously regardless of the circumstances involved. This starts with hiring an experienced Washington D.C. tax lawyer to deal with the IRS on your behalf.

2020 IRS Disaster Relief Programs

The IRS announces numerous disaster relief each year, although some are much more highly-publicized than others. Through the end of October, the IRS has already announced 26 disaster relief programs in 2020—and this does not include major statutory tax relief initiatives such as those implemented in response to the novel coronavirus pandemic.

For the most part, IRS disaster relief programs relate to the economic impacts of major storms and other weather events. With the California wildfires and the turbulent hurricane season in the Gulf of Mexico, many of the IRS’ tax relief programs this year have focused specifically on individual and business taxpayers in the West and South. However, the IRS has implemented disaster relief programs in jurisdictions ranging from Puerto Rico to Iowa this year as well.

What Constitutes Disaster Relief Tax Fraud?

With respect to IRS and SBA disaster relief programs, what constitutes tax fraud depends on the nature of the program and the specific relief that is being offered. In most cases, IRS investigations targeting disaster relief tax fraud focus on individuals and businesses that either:

• Fraudulently claim eligibility for disaster relief tax benefits;
• Fraudulently claim excessive disaster relief tax benefits; or,
• Take advantage of tax reporting and payment deadline extensions (or other tax benefits) without necessity.

What Should You Do if You are Facing an IRS Investigation?

If you are facing an IRS investigation in relation to claiming disaster relief tax benefits, you must proactively defend yourself during the IRS’ investigation. Tax fraud carries substantial penalties, and it can be prosecuted as a federal crime in many cases. By hiring an experienced Washington D.C. tax lawyer promptly, you can intervene in the IRS’ investigation, work to establish compliance, and mitigate your risk of facing civil or criminal tax fraud charges.

Contact Washington D.C. Tax Lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group

Are you under investigation by the IRS? To discuss your situation with Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, call 202-349-4033, email ket@thornlawgroup.com or request a confidential consultation online now.