In Episode 17 of Final Notice, Jason Carr breaks down the Regina Durkin case, involving fourteen fraudulent refund claims seeking more than $7.7 million from the IRS.
The case centers on pandemic-era employment tax credits claimed for companies that, according to court records, were not operating, had no employees, and paid no wages.
Show Notes:
Regina Durkin, of New River, Arizona, pleaded guilty to one count of conspiracy to file false claims after court records indicated that she and others submitted false quarterly employment tax returns to the IRS.
The claims sought refunds based on the Employee Retention Credit and the paid sick and family leave credit, pandemic-era credits designed to help qualifying employers. According to court records, the companies were not operating at the time, had no employees, and paid no wages.
In total, Durkin and others submitted fourteen fraudulent claims requesting more than $7.7 million in tax refunds. Sentencing is scheduled for September 11, and the offense carries a maximum penalty of ten years in prison.
Jason explains the line between an unsupported ERC claim and a criminal false-claims case, why payroll records matter, how IRS-CI follows employment tax filings, and what taxpayers and tax professionals should do before a questionable refund claim becomes an IRS-CI problem.
Key Takeaways
- Payroll credits require payroll. If there are no employees and no wages, the claim fails at the foundation.
- A weak ERC claim may create a civil IRS problem. A fabricated payroll story can create criminal exposure.
- Forms 941 and payroll records are not administrative details. They are evidence.
- Tax professionals should verify source records before preparing or supporting ERC, paid leave, or other payroll credit claims.
- If an unsupported claim has already been filed, move quickly to assess withdrawal, amendment, repayment, penalty defense, and privilege-sensitive communications.
Resources Mentioned
DOJ case source: https://www.justice.gov/opa/pr/arizona-woman-pleads-guilty-77-million-tax-refund-fraud-scheme
IRC § 3134, Employee Retention Credit: [https://uscode.house.gov/view.xhtml?req=(title:26%20section:3134%20edition:prelim)](https://uscode.house.gov/view.xhtml?req=(title:26%20section:3134%20edition:prelim)
18 U.S.C. § 286, conspiracy to defraud the government with respect to claims: https://uscode.house.gov/view.xhtml?req=(title:18%20section:286%20edition:prelim)%20OR%20(granuleid:USC-prelim-title18-section286)&f=treesort&edition=prelim&num=0&jumpTo=truel
26 U.S.C. § 7206, fraud and false statements: https://www.law.cornell.edu/uscode/text/26/7206
IRS ERC FAQs: https://www.irs.gov/coronavirus/frequently-asked-questions-about-the-employee-retention-credit
The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com