The Employee Retention Credit (ERC) was introduced as part of the March 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act to encourage businesses to maintain their workforce during the economic disruptions of the COVID-19 pandemic. Over time, legislative developments—most notably through the December 2020 Consolidated Appropriations Act and the March 2021 American Rescue Plan Act—expanded both the eligibility criteria and the potential credit amounts.

On May 22, 2025, the House of Representatives passed H.R. 1-119th Congress (2025-2026), titled as the “One, Big, Beautiful Bill Act” (the “Act”), a budget bill that, among other things, addresses soon to sunset provisions of the Tax Cuts and Jobs Act (the “TCJA”) while also making modifications to U.S. tax policy and spending. Commentators and economists estimate the Act, if passed by the Senate and signed into law by President Trump, may have a net cost of $3.8 trillion over 10 years, and would increase the federal statutory debt limit by $4 trillion.

The United States Department of Justice (“DOJ”) has intensified civil fraud investigations aimed at borrowers who obtained Paycheck Protection Program (“PPP”) loans despite falling outside the class of entities Congress meant to assist. Many non-profit organizations are alleged to have falsely certified PPP eligibility and, as a result, face treble-damages liability under the federal False Claims Act (“FCA”) as well as potential criminal exposure for wire- and mail-fraud. The DOJ’s focus on pandemic relief fraud is part of a broader government initiative to recover misallocated federal funds and deter future misconduct. This situation is a reminder that every organization that received—or is contemplating forgiveness of—a PPP loan should reassess its eligibility and the accuracy of the certifications it made to the Small Business Administration (“SBA”).