GAO official: Employee Retention Tax Credit 'basically over' but pandemic‑era fraud requires permanent oversight

An unnamed senator opened a Senate hearing by citing the 2024 Government Accountability Office report that flagged extensive fraud in the Employee Retention Tax Credit (ERTC) and said the Internal Revenue Service had paused processing new claims.

Mister Dodaro, a GAO official, told the committee that “it’s basically over,” referring to the active period for ERTC claims, but he added that taxpayers can still file amended returns that may have tax implications. He described the program as “ill‑fated” and said the IRS needs to focus on compliance and recovering any overpayments.

Why it matters: GAO’s testimony framed the ERTC as one example of broader weaknesses in how the government prevented and detected fraud during the pandemic. The agency estimates there was significant improper payment and potential undetected fraud in pandemic relief programs and told senators that existing tools and resources are insufficient to pursue many cases.

Mister Dodaro highlighted several concrete steps for Congress and agencies: extend statute‑of‑limitations windows for key pandemic programs (he noted Congress extended the PPP window from five to ten years), grant inspector generals greater authority to settle administrative cases, and make pandemic‑era data‑sharing arrangements permanent so leads produced by IG collaborations can be pursued. “We’ve developed thousands of leads,” he said, and the current temporary arrangements are due to expire.

The senator who opened the hearing urged more resources and stiffer penalties for those who steal from government programs, saying the “numbers on fraud … are just mind numbing.” Mister Dodaro cautioned that while penalties can be severe, the larger problem is undetected fraud and insufficient investigatory capacity at many agencies.

The hearing did not produce new legislation on ERTC itself. Instead, GAO’s witness pressed for stronger, permanent oversight tools and better implementation of existing laws that require fraud risk assessments and data analytics to detect improper payments. The committee signaled interest in moving broader oversight measures, including the Government Spending Oversight Act mentioned in opening remarks, though no vote or formal action on those measures occurred during the session.