Joy and Kurt,
From DGI's meeting minutes:
"5/20/21; Additionally, the other item of note is a $66,271 in Payroll Protection Program (PPP) - Loan Funds. Because DGI is a 501c (6) the entity did not qualify for the round 1 PPP forgivable loan program. The Federal round 2 of the PPP broadened then entities to include 501(c)(6)'s and that DGI was approved for the loan program."
On 5/20/21's board minutes, DGI received $66,271 from a PPP federal loan, and 8/21/23 minutes reveal receipt of $66,740 was received for the Employee Retention Payment (ERC)
8/21/23; "Ms. Ross then discussed the financials for Downtown Greensboro Inc., beginning with the Statement of Financial Activity noting that the first three payments for the Employee Retention Payment totaling $66,740 was received and that DGI should receive on additional payment once the paperwork was finalized. And, that Bottom-Line Concepts would receive a payment of 20% for their work in filing for the credit."
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Pursuant to North Carolina Public Records Law (Chapter 132) and DGI’s contractual obligations as a recipient of City of Greensboro funding, I hereby request the following records related to DGI’s Paycheck Protection Program (PPP) loan and Employee Retention Credit (ERC) claims:
PPP Loan Documentation
Copies of all PPP loan applications (Round 1 and Round 2) submitted by DGI.
SBA Form 3508 (or equivalent) submitted for PPP loan forgiveness, including:
Payroll cost calculations used to justify forgiveness.
Documentation proving PPP funds were used exclusively for eligible expenses (payroll, rent, utilities).
SBA approval/disbursement notices for the PPP loan (May 2021).
Employee Retention Credit (ERC) Claims
All ERC filings (IRS Forms 941-X or 7200) submitted by DGI or its third-party preparer (Bottom-Line Concepts).
Supporting payroll documentation used to claim the ERC refund, including:
Quarterly payroll reports (2020–2021) proving eligibility.
Documentation showing no overlap between ERC-qualified wages and PPP-forgiven wages.
Contracts/communications with Bottom-Line Concepts, including fee agreements (e.g., the referenced 20% contingency fee).
Board & Financial Records
All board meeting minutes between January 1, 2024-present
Financial statements showing the allocation of PPP and ERC funds.
Communications (emails, memos) between DGI staff/board and the SBA/IRS regarding compliance.
Compliance Reviews
Any audits, internal reviews, or legal opinions assessing potential double-dipping risks.
Delivery Method & Fees
Please provide records electronically.
Deadline: NC law requires a response within a reasonable time. Please confirm receipt of this request and provide a timeline for production.
Legal Basis for Request
As a 501(c)(6) organization receiving public funds, DGI is subject to transparency requirements under:
NCGS § 132-6 (Nonprofits performing governmental functions).
City of Greensboro contracts (if DGI receives municipal funding).
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If DGI received both PPP loans and Employee Retention Credits (ERC) for the same payroll expenses, this could constitute "double-dipping", a serious violation of federal program rules. Here’s why this would be problematic and what the consequences could be;
High Contingency Fees (20%): The IRS has warned against ERC mills that charge excessive fees (often 15-25%) based on the credit amount, which may indicate a risky filing.
Possible Audit Risk: The IRS has been cracking down on fraudulent ERC claims, and if DGI’s claim was improperly filed, it could face repayment demands, penalties, or legal scrutiny.
The Double-Dipping Rule
PPP Loans: These were meant to cover payroll costs, and forgiveness was contingent on using the funds only for eligible expenses (primarily payroll, rent, utilities).
ERC: This was a refundable tax credit for employers who kept employees on payroll but did not receive PPP forgiveness for those same wages.
Key Restriction: The same payroll dollars cannot be claimed for both PPP forgiveness and ERC. If DGI used PPP funds to cover wages in 2020 or 2021, those same wages cannot be used to claim the ERC.
Evidence of Potential Double-Dipping in DGI’s Case;
PPP Loan (2021): $66,271 (likely covering 8-24 weeks of payroll).
ERC (2023): $66,740 (claimed as a refundable credit for retaining employees in 2020 or 2021 after 20% fee).
Red Flags:
The amounts are suspiciously similar, suggesting possible overlap.
If DGI applied for PPP forgiveness, then using the same payroll for ERC would be improper.
The involvement of Bottom-Line Concepts (taking 20%) raises concerns. Many ERC mills encouraged businesses to claim credits even if they were ineligible, including those that took PPP.
Consequences of Double-Dipping:
PPP Loan Forgiveness Denial: If the SBA audits DGI and finds that payroll was double-counted, the PPP loan may not be forgiven, turning it into a debt.
ERC Clawback + Penalties: The IRS is aggressively auditing ERC claims and has already frozen thousands of suspicious filings. If DGI wrongly claimed ERC for wages already covered by PPP, it may have to:
Repay the $66,740 ERC refund (plus interest).
Face penalties (up to 20% or more) for erroneous claims.
Be subject to tax fraud scrutiny if intent is proven.
If double-dipping occurred, DGI may need to voluntarily disclose errors to the SBA/IRS to reduce penalties.
10/26/23 DGI minutes state; "also reflected is a one-time Employee Retention Credit of $66.7k that was not in the budget but has been received and are unrestricted funds."
If DGI used the same payroll expenses to justify both PPP forgiveness and ERC, this is illegal double-dipping under federal rules. Given the amounts are nearly identical and ERC mills were notorious for pushing ineligible claims, this is a high-risk situation. The IRS and SBA are actively pursuing claw backs, so DGI should act now to verify compliance or prepare for potential repercussions.
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Follow-Up
If any records are withheld, please cite the specific exemption under NC law.
For questions, contact me.
Thanks,
g
Disclaimer:
The information contained in this request and accompanying analysis is based on publicly available meeting minutes, financial disclosures, and federal program guidance. The descriptions of potential “double-dipping” between the Paycheck Protection Program (PPP) and Employee Retention Credit (ERC) are presented for the purpose of raising legitimate questions of public interest and compliance. All individuals and entities named are entitled to provide records, explanations, or evidence that may refute or clarify these concerns. No final determination of wrongdoing has been made by any court or agency, and these matters remain allegations pending formal review. The content herein should not be interpreted as a definitive legal conclusion, but rather as a call for transparency, full disclosure of public records, and, where warranted, further investigation by the appropriate oversight authorities.