Congress created the Employee Retention Credit to help struggling businesses keep workers on payroll during the pandemic. Candies Goode-McCoy of Las Vegas treated it like an ATM.

From approximately June 2022 through September 2023, Goode-McCoy conspired with others to file more than 1,200 tax returns for her own businesses and for others, claiming the Employee Retention Credit and the paid sick and family leave credit, and seeking refunds totaling more than $98 million. The IRS paid out roughly $33 million before the scheme was stopped. Goode-McCoy personally received over $1.3 million in fraudulent refunds and about $800,000 more from clients, spending the proceeds on luxury cars, vacations, and gambling.

She pleaded guilty to one count of conspiracy to defraud the government with respect to claims and was sentenced to 54 months in prison, three years of supervised release, and more than $26 million in restitution to the IRS.

Jason explains why refundable credits like the ERC draw intense IRS scrutiny, how high-volume claims create unmistakable data patterns, and what a business should do if it already claimed an ERC it can no longer defend, including the ERC Voluntary Disclosure Program, claim withdrawal, amended returns, audit defense, and penalty relief.

This episode is for taxpayers, small business owners, tax preparers, bookkeepers, enrolled agents, CPAs, and anyone trying to understand where an aggressive credit claim crosses the line into criminal tax fraud.

Key Takeaways:

• A refundable credit is the most heavily scrutinized money in the tax code. A refund that sounds too good to be true usually is.
• The ERC was a legitimate program with specific eligibility rules: a government-ordered shutdown or a significant decline in gross receipts in qualifying periods.
• High-volume claims with repeated credits create detectable patterns. The IRS shifted most of its exam staff to audit ERC claims.
• Lifestyle that doesn't match reported income is a classic red flag investigators follow every time.
• Tax preparers should build practices on eligibility analysis, documentation, and defensible positions, not refund size.
• If you already claimed a credit you can't support, voluntary correction through the ERC Voluntary Disclosure Program or claim withdrawal is far better than waiting for the IRS to find it.
• The goal is to keep the matter in the civil tax resolution lane, through amended returns, audit defense, and penalty relief, before it becomes a criminal case.

Resources Mentioned:

• DOJ sentencing release: Business Owner Sentenced to Over Four Years in Prison for $100M COVID-19 Tax Credit Scheme
• DOJ District of Nevada release: Business Owner Sentenced to Over Four Years in Prison for $100M COVID-19 Tax Credit Scheme
• DOJ guilty plea release: Nevada Woman Pleads Guilty to Fraudulently Seeking Nearly $100M in COVID-19 Employment Tax Credits
• Related co-conspirator (IRS-CI): Nevada businesswoman pleads guilty to multimillion dollar scheme to fraudulently claim COVID-19 tax credits
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com