Chamberlain Hrdlicka’s Paycheck Protection Program (“PPP”) Audits and Investigations Practice can provide the expertise to advise and assist PPP loan borrowers as they navigate the PPP civil audit and review process and PPP criminal investigations and enforcement process.
Our attorneys have been at the forefront of the PPP since it was created and as it has evolved by assisting clients with all aspects of the PPP application and review process, writing articles and providing expert interviews for industry-leading publications, creating and presenting educational seminars for a national audience, and engaging in the ongoing legislative process.
We can proactively assist clients to determine risk, ensure compliance, and provide review/audit defense and other support for potential investigations. If you have questions or concerns regarding the statements or certifications made in your PPP loan application, or if civil or criminal enforcement actions have already been initiated, our nationally renowned attorneys can provide an immediate, thorough, and effective defense for you and your business.
Areas of Experience
Civil Audits and Reviews
The SBA will review/audit all PPP loans in excess of $2 million following the lender’s submission of the loan forgiveness application. PPP loans that are $2 million or less may nevertheless be subject to review/audit, subject to the SBA’s discretion.
For borrowers seeking loan forgiveness, both the lender and the SBA will likely review/audit the loan forgiveness application and substantiating documentation. The independent reviews/audits will not only cover the loan forgiveness application, but will also examine the PPP loan application to determine initial eligibility for the PPP loan. Therefore, all statements and certifications made on the PPP loan application and loan forgiveness application may be examined.
Borrowers have an elevated risk for civil audit and review if they obtained a PPP loan in excess of $2 million and/or are a public company. Borrowers may also have an elevated risk for civil audit and review if they provide false or incorrect information on the PPP loan application, the loan forgiveness application, or in connection with supporting documentation.
Borrowers may have a lower risk for civil audit and review if the PPP loan application or loan forgiveness application was submitted in good faith but nevertheless contained minor errors or omissions, or if they relied on the advice of counsel/advisor. In general, borrowers may be offered the opportunity to provide additional documentation if a determination is made against granting full loan forgiveness.
Because the PPP has developed and changed over time through legislation and other guidance, mistakes can and will occur. To demonstrate good faith, borrowers should document their decision-making throughout the PPP process, including before and after PPP loan funds are received and as the loan forgiveness application and review process proceeds. To the extent the loan forgiveness process does not go as expected, borrowers may appeal the decision.
Criminal Investigations and Enforcement
The Department of Justice has sought early indictments in more than 30 cases involving alleged fraud in PPP loan applications; some of the charges include conspiracy to make false statements to influence the SBA and conspiracy to commit bank fraud. Criminal investigation and enforcement actions have involved fraudulent PPP loan applications and the inappropriate use of PPP loan proceeds thus far, but will likely include loan forgiveness applications as well going forward.
Borrowers may have an elevated risk for criminal investigation and enforcement by the SBA, Internal Revenue Service, and Department of Justice if PPP loan funds were obtained based on false statements and misrepresentations. This could occur if borrowers provide false information on the PPP loan application or loan forgiveness application directly, such as if there is no business or borrowers were not authorized to submit an application on behalf of the business. False statements and misrepresentations can also be made on the supporting documentation if it is inaccurate, misleading, and false, such as by inflating payroll costs or documenting expenses that were never made.
Borrowers may also have an elevated risk for criminal investigation and enforcement if PPP loan funds were used for non-authorized purposes, including not just personal expenses such as luxury items (jewelry, cars, and homes) but also business expenses such as large bonuses, compensation exceeding the maximum allowed (potentially up to $46,154 for each employee and up to $20,833 for each owner-employee), and significant investments.
Borrowers may have a lower risk for criminal investigation and enforcement if the PPP loan application or forgiveness application was submitted in good faith but nevertheless contained minor errors or omissions, or if you relied on the advice of counsel/advisor. Because the PPP has developed and changed over time through legislation and other guidance, mistakes can and will occur. To demonstrate good faith, borrowers should document their decision-making process throughout the PPP process, including before and after PPP loan funds are received, and as the loan forgiveness application and review process proceeds.
- Legal 500 rankings for Chamberlain Hrdlicka as a Top Tax Law Firm and Adds to Individual Ranks in 2022June 17, 2022
- Kevin Sweeney is spotlighted in Bloomberg TaxBloomberg Tax, November 5, 2021
- Two Philadelphia Attorneys elevated by Chamberlain HrdlickaMarch 2, 2021
- Five Attorneys elevated at First Virtual Shareholders MeetingMarch 2, 2021
- PPP Audits and Investigations Practice Client AlertDecember 22, 2020
- Larry Campagna receives 2020 Bruce I. Hochman AwardOctober 28, 2020
- Quote by Juan Vasquez, Jr. in "Texas leads SBA pandemic relief loan fraud in national prosecutions" in Houston ChronicleHouston Chronicle, September 14, 2020
- Quote by Juan Vasquez, Jr. in "Texas leads SBA pandemic relief loan fraud in national prosecutions"in San Antonio Express-NewsSan Antonio Express-News, September 14, 2020
- Article in Texas Lawyer and The American Lawyer on "As COVID-19 Creates Curveballs, Firms Pivot Practices to Keep the Work Coming"September 11, 2020
- Paycheck Protection Program (PPP) Audits and Investigations PracticeSeptember 7, 2020
- Juan Vasquez, Jr. interviewed about "Three Things to Know about the Extended Paycheck Protection Program"ABC Channel 13 News and Community Impact Newspaper, July 18, 2020
- Chamberlain Hrdlicka Tax Alert - Paycheck Protection Program (PPP) Loan Forgiveness Tax IssuesMay 21, 2020
- Benefits Update - SBA Form 3508 Paycheck Protection Program (PPP) Forgiveness ApplicationMay 20, 2020
- Chamberlain Benefits Update - Tax-Free Disaster Relief Payments Under Internal Revenue Code Section 139May 5, 2020
- Chamberlain Tax Planning Update - Tax Relief From The COVID-19 Pandemic - April 8, 2020April 8, 2020
- Chamberlain Corporate Update - Paycheck Protection Program Loans Under the CARES ActApril 6, 2020
- Chamberlain Tax Planning Update - Tax Relief From The COVID-19 PandemicMarch 31, 2020
- Chamberlain L&E Update - Layoff vs. Furlough: Legal and Practical RamificationsMarch 30, 2020
- Chamberlain Corporate Update - SBA Loans Under the CARES ActMarch 27, 2020
Seminars & Presentations
- Corporate & Tax Law Society and Houston Business & Tax Law Journal, March 22, 2022
- The Compliance Burden: What Tax Professionals Need to Know in 2022 About the Paycheck Protection Program (PPP), Employee Retention Credit (ERC), and Audit RiskJuan Vasquez and Victor Viser presentation at the Texas Society of CPAs Tax ExpoJanuary 10, 2022
- American Bar Association Section of Taxation, February 17, 2021
- Houston Bar Association, September 16, 2020
- Tax Implications of Paycheck Protection Program and Related Expenses: Deductibility, PPP Loan Forgiveness and Exclusion from Taxable IncomeStrafford, August 13, 2020
- Chamberlain Hrdlicka Webinar on New Legal Considerations for Opening Up Your Business During a Pandemic - June 11, 2020 from 2:00-4:00 p.m. CDTFree Webinar on New Legal Considerations for Opening Up Your Business During a PandemicOnline Webinar, June 11, 2020
- Chamberlain Hrdlicka Webinar on Top Legal Traps for Opening Up Your Business in a Pandemic - June 3, 2020 from 2:00-4:00 p.m. CDTFree Webinar on Top Legal Traps for Opening Up Your Business in a PandemicOnline Webinar, June 3, 2020
- Free Webinar on Top Legal Traps for Opening Up Your Business in a PandemicOnline Webinar, May 28, 2020
- Free Webinar on Top Legal Traps for Opening Up Your Business in a PandemicOnline Webinar, May 21, 2020
- IRA Landscape After SECURE and CARES Act Seminar by Chamberlain Hrdlicka and Atlas Retirement StrategiesIRA Landscape After SECURE and CARES Act Seminar by Chamberlain Hrdlicka and Atlas Retirement StrategiesFree Webinar, April 30, 2020
- Juan Vasquez, Jr. and Victor Viser article on "Defending Religious Exercise to Keep a Family Together"Houston Lawyer, 2022
- Navigating the Paycheck Protection Program (PPP) Loan Forgiveness Application, Lender Review and Government Audit Process, and Corresponding Tax ConsequencesTexas Tax Lawyer, Fall 202
- Paycheck Protection Program Audits Have Started! Be Prepared for Audits, Appeal Process, and Tax ConsequencesBloomberg Tax, December 10, 2020
- Today’s CPA, July 2020
- Bloomberg Tax, July 23, 2020
- Who CARES About Tax Issues for Small Business: A Review of the Tax Forgiveness, Tax Deduction, and Other Tax Issues Associated with the CARES Act’s Paycheck Protection Program (“PPP”)Texas Tax Lawyer, Spring 2020
- Bloomberg Tax, May 21, 2020
- Tax Blawg, December 24, 2020
- Business and International Tax Blog, December 23, 2020