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

February 16, 2025 TruthUSA

The IRS warned last year that the vast majority of an employment tax credit program it reviewed showed ‘risk of being improper.’

A woman from Nevada involved in defrauding the United States of tens of millions of dollars’ worth of 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 due to 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. McCoy received more than $1.3 million in these refunds and was paid around $800,000 from her clients for whom she filed fraudulent returns.

Sentencing on 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,” said the DOJ.

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

Last month, the DOJ charged seven individuals 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 pandemic-related employment tax credits, seeking to defraud the United States of over $600 million.

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

ERC Fraud

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

A group of over a million ERC applications were reviewed, representing over $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,” said the agency.

“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 last year, the IRS’s Criminal Investigation initiated 450 criminal cases involving potentially fraudulent claims valued at almost $7 billion.

In July, 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, said 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,” said former IRS Commissioner Danny Werfel.

“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.”

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 this year.

Meanwhile, in September, 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,” said Sen. Thom Tillis (R-N.C.), one of the lawmakers who introduced the bill. “It’s past time to eliminate this fraud-ridden pandemic-era policy so we can concentrate on getting our fiscal house in order.”

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