CARES Act Advisory Services

Navigate complexities of PPP and ERC

Since the enactment of the CARES Act, government agencies, attorneys, borrowers, and lenders have relied on Stout’s expertise to assist with fraud investigations and legal claims related to the Paycheck Protection Program (PPP) and to navigate the complexities of the Employee Retention Credit (ERC or ERTC).

Our Team

The Stout CARES Act Advisory Services team is comprised of seasoned financial professionals, including Certified Public Accountants (CPAs), Certified Fraud Examiners (CFEs), PhDs, MBAs, former financial services auditors, and other specialists. Our professionals have served as consulting and testifying experts in a wide array of matters in U.S. District and State courts.

Our deep expertise spans across various aspects of the CARES Act, encompassing False Claims Act cases, breach of contract disputes, IRS audits, refund litigations, and other claims. Stout professionals have also served as trusted advisors to government agencies to assist with investigations and prosecutions related to CARES Act fraud, particularly in programs like the PPP and Economic Injury Disaster Loans (EIDL).

Paycheck Protection Program (PPP)

Background

The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) was a $2.2 trillion economic stimulus bill passed by the U.S. Congress and signed into law on March 27, 2020, in response to the economic fallout from the COVID-19 pandemic.

One aspect of the CARES Act authorized the Small Business Administration (SBA) to provide guarantees for potentially fully forgivable loans of up to $10 million to eligible borrowers under the PPP. Nearly 12 million loans totaling $800 billion were originated.

While the aid provided significant relief, the expedited rollout of programs like the PPP and other benefits created opportunities for fraudulent activities, including:

False Certifications and Non-Compliance: Applicants falsely certified compliance with eligibility requirements, including need-based criteria and fund usage restrictions, in order to receive CARES Act assistance.

Loan and Grant Fraud (PPP & EIDL): Individuals and businesses submitted false information, including inflated payrolls, fake business entities, fake employees, or forged documents, to fraudulently obtain loans and grants under the Paycheck Protection Program and Economic Injury Disaster Loan program.

Unemployment Insurance Fraud: Applicants falsely claimed benefits by using stolen identities, misrepresenting employment status, or filing in multiple states to collect enhanced unemployment payments.

Identity Theft: Criminals used stolen personal or business information to fraudulently access various relief programs, including stimulus payments and unemployment benefits.

Misuse of Funds: CARES Act funds were used for unauthorized purposes — such as personal luxury items, real estate, or cryptocurrency investments — rather than the intended business or economic support.

Stout Services

Due to the heightened risk of fraud and noncompliance surrounding PPP loans and other CARES Act stimulus programs, law firms and government agencies are increasingly relying on Stout for specialized expertise in high-stakes investigations and complex litigation.

Our team works collaboratively with legal counsel and enforcement authorities to deliver objective, data-driven insights and expert analysis. Our services include:

• Early case assessment to help counsel and investigators evaluate the financial and factual merits of PPP and CARES Act-related matters
• Expert consulting on CARES Act compliance, use-of-funds analysis, and related regulatory considerations
• Testifying expert services in federal and state courts on matters involving damages, fraud, financial reporting, and other issues requiring financial expert opinions
• Forensic accounting and financial analysis to identify misstatements, false certifications, or misuse of stimulus funds
• Quantification of economic damages in connection with False Claims Act matters, breach of contract disputes, or regulatory enforcement matters
• Review and evaluation of documentation submitted to the SBA or other government bodies, including loan applications, forgiveness certifications, and payroll substantiation
• Advanced data analytics to identify fraud patterns, irregularities, and trends in large datasets of loan and financial information
• Support for internal investigations and due diligence efforts related to suspected fraud or noncompliance with stimulus programs
• Independent, third-party assessments to inform enforcement decisions or validate findings from internal or external reviews

Employee Retention Credit (ERC)

Background

The Employee Retention Credit (ERC or ERTC) is a refundable tax credit for certain eligible businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. The magnitude and alleged abuse of the program has led the IRS to scrutinize the tax returns that claim the credit and issue numerous warnings and commence enforcement actions against service providers and taxpayers.

Stout Services to Legal Counsel Representing Taxpayers and Service Providers

Information Document Request (IDR) Support

Companies facing Information Document Requests (IDRs) for their ERC claims need trusted advisors to navigate IRS examinations. Our expertise and understanding of IRS expectations uniquely position us to partner with you in defending these claims.

We offer a full-service solution, assisting with IRS exams, preparing substantiating documentation, and executing strategies for optimal client outcomes while managing risk and preserving revenue.

Claim Documentation Evaluation and Analysis

As a trusted advisor, your clients rely on your guidance, but the ERC program’s complex rules on aggregation, employer size, eligibility, calculations, and government orders — varying by industry, jurisdiction, and time — can create risks in supporting documentation.

Leverage Stout’s ERC expertise to ensure consistency and accuracy in your clients’ claims. We analyze claim documentation, augment support where needed, and provide deep insights into your client’s specific facts and circumstances, reducing risk and ensuring optimal outcomes.

ERC Eligibility Analysis and Audit Readiness

Instill confidence with your clients and save time to focus on strategic business outcomes. ERC eligibility analysis is complex and time-consuming, requiring a nuanced understanding of government orders and situational details.

Whether you’re analyzing eligibility or preparing for an audit, managing and mitigating risks requires a strategic approach. At Stout, we offer deep ERC expertise, along with tools, processes, and knowledge of state and local government orders to support your efforts. We conduct independent analyses of your client’s circumstances to assess eligibility for the Employee Retention Credit during specific time periods.

Refund Litigation Support

Businesses can now sue the IRS if their Employee Retention Credit (ERC) claims face long delays or disallowances. The ERC, intended to support businesses during the COVID-19 pandemic, has seen significant processing delays, leaving businesses entitled to refunds waiting for action. Eligible employers can take legal action to compel the IRS to review their claims.

Eligible taxpayers can file a lawsuit if a refund is delayed over six months, including for ERC claims. The legal process involves a review of the claim and filing a lawsuit in federal court, which requires expert legal representation to navigate. Litigation may be the best option for businesses facing denied claims, delayed claims (over six months), and IRS audits or investigations.

Stout experts have been retained by top law firms, Fortune 100 companies, and federal agencies to provide deep technical expertise and credible testimony in high-stakes cases. Leveraging experience across both federal and state jurisdictions, our experts deliver independent, well-supported insights grounded in market research and proven credentials.