PPP Shell Company Discovery Act

Bill Number

H.R. 324

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Commerce

Status

Introduced

Latest Action

2025-01-09: Referred to the Committee on Ways and Means, and in addition to the Committee on Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Last Updated

2025-02-27T14:05:47Z

AI-Generated Summary

Purpose of the Legislation

The "PPP Shell Company Discovery Act" (H.R. 324) aims to improve the detection and investigation of potential fraud in loans provided under the Paycheck Protection Program (PPP), a COVID-19 relief initiative. It does this by authorizing the collection and sharing of specific financial and tax information to identify suspicious loan recipients, such as shell companies (entities created primarily to exploit programs without real operations), for criminal probes.

Key Provisions

• Compilation of PPP Loan Recipient List: The Secretary of the Treasury, after consulting with the Small Business Administration (SBA), the Pandemic Response Accountability Committee, and others, must create a comprehensive list of all PPP loan recipients. This list includes each recipient's name, mailing address, taxpayer identification number (TIN, a unique ID used for tax purposes), and the total amount of PPP loans received. The full list is shared with the Internal Revenue Service (IRS) and the Department of Justice (DOJ).

• Specialized IRS Lists for High-Risk Recipients:
• No FICA Tax Withholding List: The IRS Commissioner must compile a list of PPP recipients who did not withhold or deduct Federal Insurance Contributions Act (FICA) taxes (payroll taxes for Social Security and Medicare) from employee wages in 2019. This list includes the same details as the main list.
• Large Loan Relative to Wages List: The IRS must create another list of PPP recipients where the total PPP loan amount equals or exceeds four times the highest monthly wages (as defined under tax law for employer FICA taxes) reported for any month in 2019. This also includes the standard recipient details.

• Notifications and Disclosures: The IRS Commissioner notifies the Attorney General (head of the DOJ) and the Treasury Secretary once these specialized lists are complete. The lists can then be disclosed for criminal investigations under existing tax code rules (Internal Revenue Code Section 6103(i)(1)), which allow limited sharing of tax return information in non-tax criminal cases.

• Definitions:
• PPP Loan: Refers to forgivable loans made under specific sections of the Small Business Act during the pandemic.
• PPP Loan Recipient: Any person or entity on the main Treasury list.

Significant Changes to Existing Law

• This bill expands access to tax-related data (including return information) specifically for PPP fraud investigations, building on but not altering the core disclosure rules in Internal Revenue Code Section 6103. It introduces targeted lists based on 2019 payroll tax data to flag anomalies, which were not previously mandated for PPP oversight. No broad changes to privacy laws are made, but it streamlines information sharing between agencies without needing new subpoenas or requests in every case.

Potential Impacts

• On Government Agencies: Enhances coordination among the Treasury, IRS, SBA, and DOJ, potentially speeding up fraud investigations and recoveries of misallocated PPP funds (estimated at billions in fraud). It may increase workload for the IRS in compiling lists but provides tools to prioritize high-risk cases.
• On Citizens and Businesses: PPP recipients, especially small businesses that legitimately used the program, face no direct new burdens, but those involved in fraud could see heightened scrutiny, leading to audits or prosecutions. Taxpayers overall may benefit from better accountability for public funds but could worry about expanded government access to financial data.
• On International Relations: Minimal direct impact, as PPP was a domestic U.S. program; however, it could indirectly affect foreign entities or individuals who received loans through U.S. operations by enabling cross-border fraud probes.

Main Stakeholders Affected

• Government Entities: Treasury Department, IRS, SBA, DOJ, and the Pandemic Response Accountability Committee, which gain better data for enforcement.
• Businesses and Individuals: PPP loan recipients (over 11 million businesses and entities received loans totaling about $800 billion), particularly those with irregular 2019 payroll activity, who may be flagged for review.
• Taxpayers and the Public: Indirectly affected through improved fraud prevention, potentially leading to more efficient use of federal relief funds.

Notable Legal, Constitutional, or Political Implications

• Legal: Relies on established tax code provisions for disclosing sensitive information (like TINs and return data), ensuring compliance with privacy safeguards under Section 6103. It could strengthen civil and criminal cases against PPP fraud without creating new offenses.
• Constitutional: Raises potential Fourth Amendment concerns (protection against unreasonable searches) due to proactive data sharing, but these are mitigated by limiting use to criminal investigations and requiring consultations among agencies. No broad surveillance is authorized.
• Political: Supports bipartisan efforts to combat pandemic-era waste and abuse, potentially appealing to fiscal conservatives focused on accountability. It may spark debates on balancing fraud detection with business privacy, especially for legitimate small firms caught in data sweeps.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Timmons, William R. [R-SC-4]

Recent Actions

• 2025-01-09: Referred to the Committee on Ways and Means, and in addition to the Committee on Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-01-09: Referred to the Committee on Ways and Means, and in addition to the Committee on Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-01-09: Introduced in House
• 2025-01-09: Introduced in House

Bill Versions

• PPP Shell Company Discovery Act — issued 2025-01-09 — PDF (4 pages)