In their conversation, Goulder and Stone discuss the IRS’s focus on fraud in two particular areas: the employee retention credit claims and syndicated conservation easement transactions. Stone explains the differences between civil and criminal fraud in terms of judicial venues, punishments, and statutory authorizations. He highlights the syndicated conservation easement transactions, which involve pooling resources with investors to receive deductions for conserving property. Stone also discusses the employee retention credit (ERC), a program passed during the pandemic to help struggling businesses pay employees.
Stone addresses the allegations of fraud associated with these programs, noting that the ERC claims have been more prevalent than conservation easements. He mentions claims of rampant fraud by whistleblowers and senators, but emphasizes that not all ERC claims have been processed yet. Stone points out the difference between fraud and mistakes in claiming the ERC, highlighting the importance of distinguishing genuine claims from fraudulent ones.
The article uses the metaphor of “The Boy Who Cried Wolf” to illustrate the potential long-term risks of alleging widespread fraud in these programs. Stone warns that eroding taxpayer trust by casting doubt on the validity of claims could have real consequences for taxpayers. He suggests that attributing fraud to these programs without concrete evidence may lead to distrust and fear among taxpayers. Stone makes a case for the importance of distinguishing between overgenerous programs and actual fraud when criticizing government spending.
Stone concludes the conversation by emphasizing the role of Congress in addressing concerns about fraud in these programs. He suggests that legislative action to modify or phase out programs like the ERC would be a more appropriate response to perceived issues, rather than simply alleging fraud. Stone acknowledges the challenges faced by the IRS in processing claims but stresses the importance of upholding the integrity of the tax system while addressing concerns about fraud.
