Nevada Woman Pleads Guilty to Nearly $100 Million COVID-19 Tax Credit Fraud

The Department of Justice in Washington on Jan. 9, 2025. Madalina Vasiliu/The Epoch Times

A woman from Nevada involved in defrauding the United States of tens of millions of dollars’ worth of COVID-19 pandemic tax credits has pleaded guilty in the case, according to the U.S. Department of Justice (DOJ).

Candies Goode-McCoy of Las Vegas “conspired with others to file tax returns seeking fraudulent refunds based on the employee retention credit (ERC) and paid sick and family leave credit,” the agency said in a Feb. 14 statement. “From around June 2022 through September 2023, McCoy filed approximately 1,227 false tax returns for her businesses and others claiming these refundable credits.”

ERC was authorized by Congress in response to the COVID-19 pandemic and gave small businesses refundable tax credits if they paid employees while being shut down because of lockdowns and other restrictions. It was aimed at encouraging businesses to retain their employees.

The paid sick and family leave credit was offered to reimburse businesses for wages they paid to workers who were on sick or family leave and were unable to work.

In total, the fraudulent claims sought more than $98 million in refunds, of which the IRS paid out roughly $33 million, according to the DOJ statement. McCoy received more than $1.3 million in these refunds and received about $800,000 in payments from clients for whom she knowingly filed fraudulent returns, according to the statement.

Sentencing in the case is set for Feb. 23, 2026, with McCoy facing a maximum of 10 years in jail. She will be subjected to a period of supervised release, and have to pay restitution and monetary penalties.

“McCoy knew that these returns were fraudulent. Neither she nor the others for whom she filed them were eligible to receive the refundable credits in the amounts claimed,” the DOJ stated.

“[McCoy] used the proceeds for her personal benefit, including the purchase of luxury cars, gambling at casinos, vacations, and other luxury goods.”

In January, the DOJ charged seven people for allegedly being involved in the “nation’s largest COVID-19 tax credit scheme.”

The defendants were accused of having filed more than 8,000 false tax returns claiming COVID-19 pandemic-related employment tax credits, seeking to defraud the United States of more than $600 million.

The individuals filed returns both on behalf of themselves and of clients, reportedly targeting the ERC and paid sick and family leave credit programs. Out of the $600 million claimed, the IRS paid about $45 million.

ERC Fraud

In June 2024, the IRS said a review of ERC applications found that the “vast majority show risk of being improper.”

More than 1 million ERC applications were reviewed, representing more than $86 billion in claims.

“The IRS identified between 10 percent and 20 percent of claims fall into what the agency has determined to be the highest-risk group, which show clear signs of being erroneous claims for the pandemic-era credit,” the agency stated.

“In addition to this highest risk group, the IRS analysis also estimates between 60 percent and 70 percent of the claims show an unacceptable level of risk.”

As of May 2024, IRS Criminal Investigation had initiated 450 criminal cases involving potentially fraudulent claims valued at almost $7 billion.

In July 2024, the IRS issued guidance detailing warning signs that could enable businesses to identify incorrect ERC claims. Aggressive promoters were luring many businesses into filing ERC claims even when they were not eligible for it, according to the agency.

“We want businesses to be aware of common errors our compliance teams are seeing, many of which reflect bad advice coming from promoters,” then-IRS Commissioner Danny Werfel said at the time.

“The IRS continues to urge people with pending claims or previously approved payments to talk to a trusted tax professional rather than a promoter and see if any of these red flags apply to them.”

The ERC is available to businesses that paid wages to their employees between March 12, 2020, and Jan. 1, 2022. The deadline for the 2020 tax year was April 15, 2024. For the 2021 tax year, the deadline is April 15.

Meanwhile, in September 2024, a group of lawmakers introduced the Employee Retention Tax Credit Repeal Act (ERTC), which seeks to prohibit processing ERC claims filed after Jan. 31, 2024, while increasing penalties for fraud.

“Repealing the ERTC is a critical step towards addressing America’s debt crisis,” Sen. Thom Tillis (R-N.C.), one of the lawmakers who introduced the bill, said. “It’s past time to eliminate this fraud-ridden pandemic-era policy so we can concentrate on getting our fiscal house in order.”